UC  NRLF 


B    M    503    Sfi3 


LIBRARY 

OF   THE 

University  of  California. 


Class 


Modern  Accountant 


0  I — MOV  \  S 


DESIGNED  FOR  THE  USE  OF  SCHOOLS 
AND  FOR  PRIVATE  STUDY 


J.  A.  LYONS   y  COMPANY 
CHICAGO  NEW  YORK 


Copyright.  1905. 

BY 

POWERS  &  LYONS 


x'S? 


CONTENTS 


I'AGK. 

Preface 6 

To  the  Student "^ 

Abbreviations 8 

Accounts  with  Cash  and  Merchandise. 9-1 1 

JournaHzing,  Mdse.  and  Cash 12-15 

Accounts  with  Bills  Receivable  and    Bills 

Payable 15-17 

Journalizing    Bills     Receivable    and     Bills 

Payable 17-20 

Sundries 21-22 

Accounts  with  Persons 22-26 

Elements  of- the  Science  of  Accounts 27-29 

Posting  and  Taking  a  Trial  Balance 30-37 

Opening  Accounts 32 

Directions  for  Posting 33-35 

Trial  Balance 37 

Closing  the  Ledger 40-45 

Statement   45-46 

Practice  in  Ruling 47 

March  Transactions 48-49 

Drafts  and  Bills  of  Exchange 50-55 

Bookkeeping  Problems 51-52 

Account  with  Interest 55-56 

Journalizing  Interest 56-57 

Accounts  with  Premium  and  Discount 57-58 

Journalizing  Premium  and  Discount 58-59 

Accounts  with  Shipments  and  Consignments. .  60 
Journalizing  Shipments  and  Consignments.  .61-63 

Account  with  Expense 63 

Journalizing  Expense  and  Profit  and  Loss.  .64-66 

Proprietor's  Account 66 

Partner's  Account 67-68 


PAGE. 

Accounts  Continued 69-78 

Introduction  of  Sales  Book 70 

April 70-73 

May 74-77 

Results  for  April  and  May 77 

Problems  in  Merchandise  Account 78 

The  Balance  Sheet 79-82 

Problems 81-82 

Supplementary  Exercises 83-85 

Discounts 86-88 

Review  Questions 89 

Cash  Book 90-92 

Jobbing  Business 93-119 

Explanations 93-94 

Day  Book 95-97 

September 99-103 

Bill  Books 100-101 

Results  for  August  and  September 104-105 

October  and  November 105-114 

Column  Cash  Book 108-109 

Petty  Sales  Column 108 

Cash  Discounts 109 

Results 114 

Correction  of  Errors 115-118 

Monthly  Statements 118 

Review  Questions 118-119 

Retail  Grocery 120-127 

Single  Entry 127 

How  Gains  or  Losses  are  Produced 129 

Two  Methods  of  Ascertaining  Gains  or  Losses  129 
To  Change  from  Single  to  Double  Entry 130 


228821 


PREFACE 


THIS  book  is  designed  to  set  forth  the  principles  and  rules  of  accounting  clearly 
and  succinctly  and  to  give  sufficient  exercise  in  applying  these  principles  to 
fix  them  firmly  in  the  mind  of  the  pupil.  The  claim  is  made  that  these  prin- 
ciples are  introduced  in  an  orderly  manner  and  strictly  in  accordance  with  the  rules  of 
good  pedagogy.  But  one  new  thing  is  ever  introduced  to  the  pupil  at  one  time. 
Thus  step  by  step  the  pupil  advances  by  simple  stages  till  he  is  in  possession  of  all 
the  principles.  In  carrying  out  this  plan  considerable  use  is  made  of  exercises  and 
bookkeeping  problems.  It  is  through  these  that  a  study  is  made  of  the  individual 
account  and  of  the  relation  of  one  account  to  another. 

Probably  the  most  important  basic  thing  to  be  learned  in  bookkeeping  is  how 
to  select  debits  and  credits.  For  this  purpose  there  is  no  more  effective  instrument 
than  the  Journal.  But  the  Journal,  being  a  mere  means  to  an  unseen  end,  soon  be- 
comes tiresome.  That  the  pupil  may  see  the  object  of  journalizing,  the  form  and 
use  of  each  account  is  first  studied  before  he  is  asked  to  make  any  entries  of  it  in 
the  Journal.  In  other  words,  first  the  account  is  studied,  then  the  Journal  as  it 
effects  that  account  is  considered. 

Among  the  auxiliary  books  none  are  simpler  than  the  Sales  Book,  hence  it  is  one 
of  the  first  to  be  introduced.     Then  follow  the  Cash  Book,  Day  Book,  Bill  Book,  etc. 

The  most  successful  teachers  in  commercial  schools  no  longer  make  use  of  the 
vouchers  in  the  earlier  portion  of  the  course.  It  is  found  that  the  plan  necessitates 
the  introduction  of  too  many  things  that  are  new  at  one  time.  The  length  of 
time  the  pupil  should  study  the  subject  before  the  vouchers  are  introduced  is  a  mat- 
ter upon  which  teachers  differ,  but  we  suggest  that  when  the  pupil  has  covered  the 
work  in  this  book  up  to  page  119,  he  is  ready  to  undertake  to  use  the  vouchers  of  the 
transactions  and  to  make  his  records  from  them.  At  this  point,  or  at  page  130,  he 
may  safely  undertake  Wholesale  Accounting,  a  business  practice  set  by  the  publish- 
ers of  this  work. 


TO  THE   STUDENT 


N  entering  upon  the  study  of  Book-keeping  you  should  realize  that  you  are 
undertaking  a  study  which  may  be  of  great  value  and  importance  to  you 
through  life.  Although  you  may  never  use  Book-keeping  as  a  means  of 
livelihood,  yet  the  study  of  the  science  of  accounts  will  call  into  exercise  many 
qualities  of  mind  which  are  ver\'  essential  to  success  in  life. 

The  first  essential  to  a  good  book-keeper  is  accuracy.  The  slightest  mistake  or 
discrepancy  must,  sooner  or  later,  be  discovered  and  corrected,  before  the  book-keeper 
can  proceed.  Great  care  and  constant  watchfulness  are  required,  especially  by 
beginners,  to  prevent  troublesome  errors.  Every  experienced  book-keeper  has 
learned  that  it  is  easier  and  far  better  to  avoid  errors  than  to  detect  and  correct 
them. 

Another  very  essential  element  in  good  book-keeping  is  neatness.  Good  busi- 
ness men  place  great  stress  upon  this,  and  insist  that  their  books  must  be  neatly  as 
well  as  correctly  kept.  The  writing  in  a  set  of  books  should  be  a  fluent  style, 
neat,  plain  and  without  shading,  except  in  the  case  of  ledger  titles  or  other  prom- 
inent words.  The  figures  should  be  small,  neat  and  plain,  and  the  ruling  should  be 
done  with  care.  All  blots  and  erasures  should  be  carefully  avoided,  and  the  books 
should  present  a  generally  neat  and  creditable  appearance  both  inside  and  out. 

Speed  is  an  element  valuable  to  every  book-keeper,  but  by  the  beginner  it 
should  not  be  considered.  Do  not  hurry.  Haste  will  sooner  or  later  cause  error, 
and  the  error  will  cost  you  more  than  you  have  gained.  Let  your  first  aim  be  accur- 
acy, your  second  neatness,  and  only  when  these  are  attained  can  rapidity  be 
thought  of.     If  it  comes  sooner  it  is  a  fault  instead  of  a  virtue. 

There  is  nothing  in  business  that  pays  better  than  system,  and  it  should  be 
rigidly  enforced  at  every  step.  Success  in  business  life  depends,  largely,  upon 
habits  of  order  and  attention  to  details,  and  the  time  spent  by  the  book-keeper  in  a 
systematic  arrangement  of  his  work — having  a  place  for  everything — will  return  to 
him,  saved  fourfold,  in  convenience  and  facility.  Learners  are  too  apt  to  think 
that  because  no  financial  results  depend  upon  the  exercises  in  the  text  book,  no 
importance  should  be  attached  to  neatness  and  accuracy,  and  thus  reasoning,  they 
adopt  slovenly  habits,  which  may  follow  them  through  life. 

Cultivate  independence  of  thought.  Call  for  aid  from  the  teacher  only  when 
you  have  exhausted  your  own  resources.  Do  not  take  things  for  granted,  but  invest- 
igate thoroughly.  Do  not  wrong  yourself  by  assuming  to  know  that  which  you  do 
not  know,  thus  preventing  instruction  that  would  otherwise  be  of  great  value  to  you. 
And  finally,  no  matter  how  smart  you  are,  do  not  for  a  moment  think  that  your  native 
ability,  however  great,  will  compensate  for  the  want  of  patient  care  and  f.\ithful 

WORK. 


ABBREVIATIONS  AND   SIGNS 


Account     Acct.  or  ^^^ic 

Against Vs. 

Agent A^t. 

Amount Amt. 

Bags bg. 

Balance Bat. 

Bales bl. 

Bank Bk. 

Barrel bbl. 

Bill  Book B.  B. 

Bought  Bot. 

Boxes bx. 

Brought .^ Brot. 

Bills  Receivable Bills  Bee. 

Bills  Payable Bills  Pay. 

By per 

Capital Cap. 

Cartage,  Insurance  and  Freight C.  I.  F. 

Cash  Book C.  B. 

Collect  on  Delivery C.  O.  D. 

Company Co. 

Charged Ch^d. 

Check  Ck. 

Commission Co7n. 

Creditor Cr. 

Collection Col. 

Consignment Const. 

Day  Book D.  B. 

Deposit Dep. 

Draft Dft. 

Discount Dis. 

Ditto — the  same do. 

Dozen doz. 

Debtor Dr. 

Drayage Dray. 

Errors  and  omissions  excepted E.  &=  O.  E. 

Exchange Exch. 

Expense Exp. 

Folio  Fol. 

Free  on  board F.  O.  B. 

Freight Frt. 

Forward Ford. 

Gallons    gal. 

Hogsneads hhd 

Hundred Hund. 

Invoice  Book /.  B. 

Interest Int. 

Inventory /«7//. 

Instant — the  present  month Inst. 

Insurance  Ins. 


Journal Jour,  or  J. 

Journal  Folio J.  F. 

Letter  Book L.  B. 

Ledger  Folio L.  F. 

Merchandise Mdse. 

Memorandum Mem. 

Month 7no. 

Number No. 

National Nat. 

One  Thousand M. 

Profit  and  Loss P.  &^  L. 

Page P. 

Payment Payt. 

Paid Pd. 

Pair pr. 

Package P^g- 

Pieces pc. 

Pounds .lb. 

Premium Prem. 

Proximo — the  next  month Prox. 

Received Reed. 

Rail  Road R.  R. 

Sundries Sunds. 

Sales  Book S.  B. 

Shipment Shipt. 

Transaction Trans. 

Ultimo — the  last  month Ult. 

Way-Bill W.  B. 

Week Wk. 

Weight Wt. 

Year .yr. 

Yards yd. 

Dollars $ 

Cents (f:  or  cts. 

Pound  Sterling / 

At  or  to @ 

Per  or  by ^ 

Per  cent % 

Bill  of  Lading ^li. 

Care  of  *^/o 

Ditto— the  same '" 

Check  mark V 

Four-quarters — one  yard 4-4 

Number  or  pounds J 

One  and  one-fourth 1^ 

One  and  two-fourths 1' 

One  and  three-fourths 1^ 


MODERN   ACCOUNTANT 


EXERCISE   I 

ACCOUNTS   WITH   CASH   AND   MERCHANDISE 

Cash  is  a  term  used  in  bookkeeping-  under  which  is  recorded  receipts  and  pay- 
ments of  money  or  the  equivalent  of  money.  Besides  money  itself,  checks,  money 
orders,  etc.,  are  entered  as  Casli  items.  In  finding  the  amount  of  money  or  cash  on 
hand  at  the  end  of  a  certain  period,  it  is  necessary  to  know  the  amount  of  cash  on 
hand  when  the  account  was  started,  the  amount  received  and  the  amount  paid  out. 
The  balance  at  beginning,  plus  the  receipts  and  less  the  payments,  equals  the  new 
balance. 

The  following  items  represent  receipts  and  payments  of  Cash: 

Example  1.— Jan.  1,  19—,  Received  Cash  $160.  Jan.  2,  Paid  Cash  $80.45.  Jan.  4,  Paid  Cash 
$25.43.  Jan.  5,  Received  Cash  $40.60.  Jan.  6,  Received  $12S.:50.  Jan.  7,  Paid  $142.:J0.  Jan.  10, 
Received  $76.20.     Jan.  11,  Paid  $26.10.     Jan.  16,  Paid  $65.     Find  the  balance  on  hand  Jan.  16. 

Trace  these  transactions  through  the  following  form : 


(Receipts) 


(Payments) 


(2?^ 


r 


i/ifi-^u]/^ 


^C?«z-<^Z'^?z-^:<i^ 


^ 


Ma 


<^^ 


A^iP^/a 


<i^r^ 


l/tz-'^zy. 


7 
// 


/te?^&.^^^-<?«-<::.<^ 


/A^ZS<P 


_i£^£^ 


The  above  is  an  account  with  "Cash."     An  account  may  have  a  single  debit  or 
a  single  credit,  or  it  may  have  several  of  either  or  both. 

ORDER  OF  CLOSING  AN  ACCOUNT 

Add  each  column,  putting  totals  in  small  pencil  figures. 

Find  the  difference  between  the  two  columns. 

Enter  the  difference  on  the  smaller  side  in  red  ink,  using  the  word  "Balance"  in  the  wide 


1. 

2. 
3. 

column 
4. 
5. 
6. 


Rule  up  the  account. 

Enter  the  totals  on  the  same  line,  both  being  the  same  amount. 

Bring  down  the  balance  on  the  opposite  side  in  black  ink  as  shown. 


10 


MODERN   ACCOUNTANT 


.   .,,.,■••,•,■••    au:ESTioNs 

1.  How  rritich  Cash  Was  received? 

2.  How  much  Cash  was  paid  out? 

3.  What  is  the  Cash  balance  and  how  is  it  found? 

4.  Which  side  can  not  be  the  greater?    Why? 

5.  How  would  you  prove  that  your  Cash  account  is  correct? 

The  above  form,  showing  the  receipts,  the  payments  and  the  balance  of  Cash,  is 
known  as  a  Ledger  form.  As  given,  it  is  sometimes  called  a  Skeleto)i  Ledger  form,  as 
the  wide  vertical  spaces  are  not  used.  The  record  of  Cash  is  known  as  an  accowit 
or  acnnuit  ivilh  cash. 

To  the  Student:  Read  the  matter  introductory  to  this  exercise;  also  study  the 
forms  given;  then  write  up  Examples  1  and  2  relating  to  Cash,  3,  4  and  5  relating  to 
Merchandise,  and  6  relating  to  both.  The  first  exercise  will  be  written  at  the  top  of 
exercise  paper.  Rule  this  up  properly,  skip  three  spaces  and  copy  the  next  exercise. 
If  an  exercise  can  not  all  be  placed  on  the  balance  of  a  page,  start  the  exercise  at  the 
top  of  the  next  page. 

Example  2,— April  1,  19 — ,  Cash  on  hand,  $298.  April  3,  Paid  for  insurance,  $96.75;  paid  for 
special  assessment,  $124.36.  April  5,  Received  for  sale  of  horse,  $145.  April  6,  Paid  notary  fee, 
$1.85.  April  7,  Paid  for  groceries,  $34.63.  April  8,  Paid  butcher's  bill,  $24.61.  April  9,  Received 
from  Brown  &  Co.  on  account,  $36.50,  April  10,  Paid  freight  on  merchandise,  $14.62.  April  11, 
Paid  for  harness,  $36.  April  12,  Received  Cash  for  interest  due,  $21.16.  April  13,  Paid  O.  E. 
Grant  on  account,  $17.25.  April  14,  Paid  for  painting  house,  $75.  April  16,  Paid  to  charity  fund, 
$20.  April  18,  Paid  for  clerk  hire  one  week,  $12.50.  April  20,  Collected  Cash  for  rent  due  on  house 
one  month,  $60.     April  21,  the  Cash  balance  is  $***.*9.     April  21,  Close  the  account. 

Merchandise  is  the  title  of  an  account  in  bookkeeping  under  which  is  recorded 
the  cost  and  sales  of  goods,  the  cost  being  the  sum  paid  for  what  we  receive,  and  the 
sales  the  sum  received  for  what  is  sold. 

The  following  items  represent  purchases  and  sales  of  Merchandise: 

Example  3.— May  1,  19—,  Bought  Mdse.,  $720.  May  2,  Bought  Mdse.,  $420.  May  3,  Bought 
Mdse.,  $560.  May  5,  Sold  Mdse.,  $480.  May  6,  Sold  Mdse.,  $520.  May  8,  Sold  Mdse.,  $140.  May  9, 
Bought  Mdse.,  $300.  May  10,  Sold  Mdse.,  $750.  May  15,  Sold  balance  Mdse.,  $640.  Find  the  loss 
or  gain. 

Trace  the  above  transactions  through  the  following  Ledger  form: 

(Cost)  MERCHANDISE  (Pn.duced) 


19- 

19— 

May 

1 
2 
3 
9 

30 

Loss  &  Gain, 

720 
420 
560 
300 

2000 

530 

May 

5 

6 

8 

10 

15 

2530 

480 
520 
140 
750 
640 

2&30 


2530 


Explanation. — Enter  the  bought  amounts  on  the  left  side  (Dr.)  and  the  sales 
amounts  on  the  right  side  (Cr.).  All  the  Mdse.  being  sold,  the  difference  is  the  loss 
or  gain.  In  this  case  it  is  a  gain,  as  the  selling  price  is  greater  than  the  buying  or 
cost  price. 


MKRCHANniSE    ACCOUNT 


H 


QUESTIONS 

1.  What  sum  did  the  Mdse.  cost? 

2.  What  sum  did  the  sales  produce? 

.■{.  What  is  the  loss  or  gain?     How  found? 

4.  What  is  the  result  if  the  credit  side  is  the  greater?    Why? 

5.  What  is  the  result  if  the  debit  side  is  the  greater?     Why? 

6.  What  is  the  loss  or  gain  per  cent? 

Example  4.— May  1,  1!)—,  Bought  Mdse.  for  Cash,  $1250.  May  2,  Paid  Cash  for  freight  on 
same,  *T5.(J0,  May  2,  Paid  Cash  for  drayage  on  same,  $U).rA).  May  5,  Sold  Mdse.  for  Cash,  $2.')4.(;0. 
May  6,  Sold  Mdse.  on  account,  $().'5.80.  May  7,  Paid  Cash  for  insurance  on  Mdse.,  $."i<).  May  9, 
Bought  Mdse.  for  Cash,  *12U.  May  10,  Sold  Mdse.  for  30  day  note,  $524.  May  15,  Sold  all  Mdse.  on 
hand  for  Cash,  $225.    Find  the  gain  or  loss. 

Example  5.— May  1,  19—,  Mdse.  inventory  on  hand,  $1275.  May  2,  Bought  of  A.  B.  Smith  on 
account,  $1324.50.  May  3,  Sold  O.  E.  Grant  Mdse.  on  account,  $524.75.  May  3,  Sold  M.  Patzke 
Mdse.  for  Cash,  $196.50.  May  5,  Sold  P.  Swift  Mdse.  on  note,  $243.()0.  May  (i,  Sold  W.  Marx  Mdse. 
for  Cash,  $245.  May  15,  Paid  Cash  for  freight  on  Mdse.,  $12(5.50.  May  1(J,  Sold  M.  Brummels  Mdse. 
on  account,  $1405.  On  May  24  the  goods  on  hand  were  listed  at  cost  price,  and  amount  to  $1200. 
Find  the  loss  or  gain. 

Trace  the  above  transactions  through  the  following  account: 

MEKCHANDISE 


19— 

May 

1 

1275 

2 

1324 

50 

15 

126 

2726 

50 

24 

Loss  &  Gain, 

1088 

85 

Balance  Invty.,   - 

V 

3814 

rssr 

"May 

5!5 

1200 

19— 

May 

3 

3 

5 

6 

16 

524 

196 

243 

245 

1405 

26  11 

75 
50 
60 

?5 

24 

Balance  luvty.,    - 

\' 

12(X) 

'  38ir 

~85" 

Explanation. — When  the  amount  of  loss  or  gain  is  to  be  found  before  all  the 
goods  have  been  sold,  it  becomes  necessary  to  find  the  value  of  the  unsold  Merchan- 
dise. This  is  called  "taking  stock."  The  amount  is  entered  on  the  right-hand  side 
(Cr.)  as  inventory.  This  counts  the  unsold  goods  as  sold  at  cost  price,  and  then  the 
difference  between  the  two  sides  is  the  loss  or  gain;  in  this  case  it  is  a  gain  because 
the  sales  side  (Cr.)  is  greater  than  the  cost  side  (Dr.). 

aUESTIONS 

1.  What  was  the  cost  of  Mdse.?  4.  Find  the  loss  or  gain  per  cent. 

2.  What  was  the  sales  of  Mdse.?  5.  How  do  3'ou  open  an  account? 

3.  What  was  the  cost  of  the  Mdse.  sold?  6.  What  must  an  account  contain? 

Now  open  two  accounts,  heading  one  "Cash"  and  one  "Merchandise,"  and  enter 
each  of  the  following  transactions  under  the  proper  heading: 

Example  6.— May  1,  19—,  O.  E.  Grant  begins  the  grocery  business  with  a  Cash  capital  of  $;J000. 
May  1,  Bought  of  W.  J.  Durand  &  Co.,  for  Cash,  a  stock  of  groceries  amounting  to  $1200.  May  1, 
Bought  of  A.  B.  Jones  &  Co.  on  account,  groceries,  $1450.75.  May  2,  Sold  W.  Marx  groceries  for 
Cash,  $504.50.  May  3,  Sold  M.  Vickery,  for  note,  $370.80.  May  4,  Paid  Cash  for  insurance  on 
groceries,  $5().  May  5,  Sold  A.  H.  Hopkins  groceries  for  Cash,  $545.90.  May  0,  Sold  O.  F.  Hinz 
groceries  on  account,  $324.  May  7,  Bought  of  W.  J.  Durand  &  Co.  groceries  for  note,  $725.  May  9, 
Paid  Cash  for  freight  on  same,  $03.75.  May  9,  Sold  W.  Henry  groceries  for  Cash,  $853.02.  May  10, 
Sold  R.  E.  Jones  groceries  on  account,  $127.80.  May  12,  Sold  M.  Kimmer  groceries  for  Cash,  $900.40. 
May  15,  The  value  of  unsold  groceries  is  $1450.  Close  the  two  accounts  as  previously;  the  Cash 
balance  is  $****. 07,  the  loss  and  gain  on  Merchandise  is  $****.52. 


12 


MODERN    ACCOUNTANT 


To  the  Student:  When  your  work  has  been  approved,  you  will  copy  it  in  your 
Exercise  Book,  always  following  the  previous  lesson,  observing  care  and  neatness  in 
all  your  work.  These  forms  are  called  Ledger  forms.  Now  have  your  Exercise 
Book  approved. 

By  referring  to  these  exercises  that  you  have  finished,  you  will  find  that  receipts 
are  entered  on  the  left-hand  side,  and  things  disposed  of  are  entered  on  the  right- 
hand  side.  Custom  has  established  the  rule  that  those  items  entered  on  the  left-hand 
side  are  to  be  called  debits  and  that  those  items  entered  on  the  right-hand  side  are  to 
be  called  credits.  Hence  the  following  rule:  Debit  what  yoti  receive ;  credit  what  you 
dispose  of. 


JOURNALIZING 


EXERCISE  II 

A  Business  Transaction  is  an  exchange  of  one  commodity  or  service  for  another. 
In  this  exchange  it  must  be  kept  in  mind  that  something  of  value  is  received  and 
that  something  of  value  is  given  out.  The  ratio  of  exchange  is  one.  Bookkeeping  has 
to  deal  with  the  recording  of  these  equalities.  The  thing  received  is  designated  as  a 
debit  item  and  the  thing  disposed  of  is  designated  as  a  credit  item. 

Journalizing  consists  in  determining  the  debits  and  credits  in  a  transaction,  and 
arranging  these  in  convenient  form  for  transferring  to  the  Ledger. 

In  every  correct  Journal  entry  the  total  debits  must  equal  the  total  credits. 

There  ^.xo,  four  forms  in  which  Journal  entries  may  be  made: 

1.  Where  there  is  but  one  debit  and  one  credit. 

2.  Where  there  are  several  debits  and  but  one  credit. 

3.  Where  there  is  but  0}ie  debit  and  several  credits. 

4.  Where  there  are  several  debits  and  several  credits. 

In  order  to  determine  the  debits  and  credits  in  any  business  transaction,  we  have 
the  following: 

GENERAL  RULE 

Debit  what  you   receive,  or  zvhat  costs  value ;    Credit  what  you   dispose   of,  or 

what  produces  value. 

FORM  OF  JOURNAL 


Year 
Month 


Day 


Names  of  Dr.  items 

or 

Debit  Position 


Names  of  Cr.  items 

or 

Credit  Position 


Dr.  Col 


Cr.  Col 


TRANSACTION'S  13 

Parts.  By  inspecting-  the  above  form  it  will  be  seen  that  a  Journal  entry  consists 
of  five  parts:  1st,  date,  being  the  year,  month  and  day;  2d,  names  of  debit  items; 
3d,  names  of  credit  items;  4th,  amount  of  debit  items;   5th,  amount  of  credit  items. 

Position.  The  names  of  Dr.  items  are  placed  next  to  the  date  column,  and  this  is 
called  the  Debit  Position.  The  names  of  the  Cr.  items  are  placed  farther  to  the  right 
and  below  the  Dr.  items,  and  this  is  called  the  Credit  Positioiu  Thus  it  may  readily 
be  determined  whether  an  item  is  a  debit  or  credit  by  the  position  which  the  name 
occupies.  The  amounts  of  the  Dr.  items  are  placed  in  the  first,  or  Dr.  colnmn.  The 
amounts  of  the  Cr.  items  are  placed  in  the  second,  or  Cr.  column. 

A  business  transaction  has  been  defined  as  an  exchange  of  values.  In  every 
exchange  something  is  received,  or  has  cost  value;  and  something  is  given,  or  has 
produced  value.     The  thing  received  is  Dr.  and  the  thing  given  is  Cr.     Therefore, 

In  Journalizing,  ask  yourself  the  question,  1st,  "What  did  I  receive?"  or  "What  cost 
value?"  and  place  the  name  of  the  item  or  items  received  in  the  Debit  Position  as 
shown  above  and  the  amount  in  the  Dr.  column;  then,  2d,  "What  did  I  dispose  of?" 
or  "What  produced  value?"  and  place  the  name  of  such  item  or  items  in  the  Credit 
Position  and  the  amount  or  amounts  in  the  Cr.  column. 

To  the  Student:  Before  attempting  to  write  up  the  Journal  for  the  transactions 
on  this  and  the  following  pages,  the  student  should  examine  carefully  the  written 
form  on  the  following  page.  Neatness  and  taste  in  penmanship,  ruling  and  figures, 
together  with  correct  forms,  are  highly  important  in  bookkeeping.  Study  the  writ- 
ten forms  carefully  for  style  of  penmanship.  Notice  that  the  letters  are  compact  and 
are  devoid  of  all  unnecessary  lines. 

Leave  a  vacant  line  between  entries  for  ruling.  Begin  with  the  first  transaction 
and  arrange  the  debits  and  credits  as  per  following  form,  which  is  known  as  z.Jouriml, 
and  the  work  of  recording  transactions  in  it  as  Journalizing. 

Jan.  1,  19—.     Bought  of  John  Brown  for  cash,  10  bbl.  Beef  at  $10,  $100. 

Beef,  flour,  pork,  etc.,  are  entered  as  Mdse.  We  bought  Mdse.  We  received  it.  It  cost  value. 
Mdse.  is  therefore  debited,  aud  must  be  entered  as  a  Dr.  item.  See  form  following.  We  have  paid 
out  Cash.  It  has  produced  us  value.  Cash  is  therefore  credited,  and  must  be  entered  as  a  Cr.  item. 
See  form  following. 

Jan.  2.     Sold  Amos  Smith  for  cash,  G  bbl.  Beef  at  $11,  $66. 

Sold  for  Cash.  Cash  is  received,  therefore  Cash  is  debited.  Mdse.  is  disposed  of,  therefore 
Mdse.  is  credited.     See  form. 

Jan.  3.      Bought  of  James   Roney  for  cash,  10  bbl.  Flour  at  $10,  $100;  50  bbl. 

Pork  at  $8,  $400.     Total  $500. 

Mdse.  is  debited  because  we  received  it.  (Enter  the  total  $500  as  one  amount.)  Cash  is  credited 
because  we  disposed  of  it. 

Jan.  4.     Bought  of   C.  E.  Brown  for  cash,  a  House  and  Lot  on  Park  avenue  for 

$2500. 

Houses  and  lands  are  entered  as  Real  Estate.  Since  Real  Estate  is  bought  or  received,  it  will 
be  debited,  and  since  Cash  is  disposed  of  it  will  be  credited. 

Jan.  5.     Sold  to  William  Allen  for  cash,  10  bbl.  Beef  at  $10,  $100;  5  bbl.  Flour 

at  $6,  $30.     Total  $130. 

Cash  is  debited.     Why? 


14 


MODERN    ACCOUNTANT 


Jan.  7.     Bought  of  D.  R.  Smith  for  cash,  a  Farm  in  Henrj'  County  for  $4000. 

Cash  is  credited.     Why? 

Jan.  8.     Sold  to  Martin  Beem  for  cash,  4  bbl.  Beef  at  $10,  $40. 


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C^^-ZZ-J--^ 


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C.--':^Zk::^^i^C/ 


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Jan.  9.  Bought  of  Henry  Seymour  for  cash,  10  shares  Union  Bank  Stock  at 
$100,  $1000. 

Union  Bank  Stock  Dr. 

Jan.  10.  Sold  to  W.  D.  Ward,  a  House  and  Lot  on  Park  avenue.  Received  in 
payment  200  bbl.  Flour  at  $10,  $2000;  80  bbl.  Pork  at  $S,  $610.     Total  $2640. 

Jan.  12.  Bought  of  G.  P.  Frost  for  cash,  3  bbl.  Kerosene  at  $5,  $15;  4  bbl. 
Lard  Oil  at  $10,  $40.      Total  $55. 

Jan.  13.  Sold  to  W.  H.  Strong,  100  bbl.  Flour  at  $9,  $900;  50  bbl.  Pork  at  $8, 
$400.  Total  $1300.  Received  in  payment  13  shares  C.  B.  &  Q.  R.  R.  Stock  at  $100, 
$1300. 

C.  B.  &  Q.  R.  R.  Stock  Dr. 

Jan.  13.  Bought  of  C.  M.  Miller,  a  House  and  Lot  in  Alton  for  $4100.  Gave  in 
payment  for  the  same  the  Farm  purchased  of  D.  R.  Smith,  $4100. 

Jan.  14.  Sold  C.  L.  Wilson,  20  bbl.  Pork  at  $10,  $200;  2  bbl.  Flour  at  $7,  $14. 
Total  $214.  Received  in  payment  2  hhd.  Sugar  at  $80,  $160;  27  boxes  Boston 
Crackers  at  $2,  $r)4.     Total  $214. 

Jan.  16.  Bought  for  cash  of  Western  Nail  Co.,  10  kegs  Flooring  Brads  at  $4, 
$40. 

Jan.  17.  Sold  Thomas  Hamer  5  shares  Union  Bank  Stock  at  $100,  $500. 
Received  in  payment  5  cases  Gingham,  5000  yd.,  at  10^,  $500. 

Jan.  18.      Bought  of  H.  C.  Dean  for  cash.  Steamer  Ivanhoe,  valued  at  $12000. 


ACCOUNTS    WITH    BILLS    RECElVAliLE    AND    BILLS    PAYABLE 


15 


Steamer  Ivanhoe  Dr. 

Jan.  20.      Sold  to  W.  D.  Waller,   3  hhd.   Sugar  at  $G0,  $180;    10  boxes  Boston 
2.25,  $22.50;  1  bbl.  Flour  at  $10.25.      Total  $212.75.      Received  in  pay- 


Crackers  at 
ment  cash. 

Jan.  21. 
$10.25,  $205. 


Sold  to  Henry  Sherman,  2  sacks  Rio  Coffee  at  $20,  $40;  20  bbl.  Pork  at 
Total  $245.      Received  in  payment  80  bbl.  N.  Y.  Salt  at  $2.50,  $200; 
1501b  Butter  at  30^,  $45.     Total  $245. 

Jan.  22.  Sold  for  cash  to  R.  Garvin,  20  boxes  Boston  Crackers  at  $2.25,  $45; 
20  bbl.  N.  Y.  Salt  at  $3,  $60;  751b  Butter  at  35^',  $26.25.     Total  $131.25. 

To  the  Student:  When  you  have  journalized  all  of  the  transactions  for  the  month 
of  January,  present  your  work  to  the  teacher  for  inspection  and  approval.  In  ruling 
up  a  Journal,  the  red  line  should  be  drawn  on  the  blue  line.  When  correct,  copy 
the  same  into  your  Journal,  and  rule  a  line  between  the  entries. 

Keep  your  work  neat  and  clean,  without  a  soil  or  blot.  Do  not  attempt  any 
flourishes  or  ornamentation  in  your  writing;  likewise  avoid  heavy  shading.  In 
writing  figures  aim  at  plainness,  and  acquire  the  habit  of  always  placing  units  of  any 
order  directly  under  those  of  the  same  order. 


EXERCISE   III 

ACCOUNTS   WITH   BILLS  RECEIVABLE  AND  BILLS  PAYABLE 

Purchases  and  sales  of  merchandise  are  not  always  made  for  cash.  Frequently 
the  buyer  may  desire  time,  and  gives  in  payment  a  -written  promise  to  pay  the 
sum  at  a  later  date.  These  written  promises  are  called  Notes.  Those  that  we 
sign  and  issue  are  called  Bills  Payable  both  when  we  issue  them  and  when  we  pay 
them  and  receive  them  back  for  cancellation.  Those  that  we  receive  from  other 
persons  properly  signed  and  issued  are  called  Bills  Receivable  both  when  we  receive 
them  and  when  we  dispose  of  them. 

Example  1. — Feb.  1,  19 — ,  Received  A.  B.  Jones'  note  for  $9G0.  Feb.  2,  Received  J.  B.  Brown's 
note  for  $47.5.65.  Feb.  5,  John  Doe  sends  us  his  note  on  account  for  $.562.  Feb.  7,  Sold  A.  B.  Jones 
note  for  $960.  Feb.  8,  Bought  two  notes  of  Smith  &  Co.,  one  for  $550  and  one  for  $.'570.  Feb.  10. 
The  first  note  bought  of  Smith  &  Co.  is  now  due  and  is  paid  b}'  the  maker.  Feb.  12,  J.  B.  Brown 
paid  $275.65  on  his  note  of  the  2d  inst.     Feb.  15,  What  is  the  balance  of   Bills   Receivable  account? 

Trace  the  above  items  through  the  following  form : 

BILLS  RECEIVABLE 


19— 

Feb. 

1 
2 
5 
8 
8 

15 

When  received,    - 
Balance,     - 

V 

960 
475 
662 
550 
370 

65 

19— 
Feb. 

7 
10 
12 

15 

When  disposed  of , 
Balance, 

v' 

,    960 
550 
275 

65 

66 

2917 

2917 
1132 

66 

65 

JSl'L 

65 

Feb. 

The  above  form  represents  a  Bills  Receivable  account. 
Explanation. — As  the  notes  are  received  they  are  entered  at  their 
on  the  left-hand  side  (Dr.  side),  and  as  they  are  disposed  of  they  are  ente 


face  value 
red  for  the 


16 


MODERN    ACCOUNTANT 


face  value  on  the  right-hand  side  (Cr.  side).  The  bala?icc  is  the  difference  between 
the  two  sides  and  represents  the  face  value  of  other  persons'  notes  in  our  possession. 
The  credit  side  can  never  be  greater  than  the  debit  side. 

Writing  the  heading  of  an  account,  as  "Bills  Receivable"  in  Example  1,  is  called 
opening  an  account. 

QUESTIONS 

1.  What  was  the  total  amount  of  notes  received? 

2.  What  was  the  total  amount  of  notes  disposed  of? 

3.  Which  side  can  not  be  greater  than  the  other?    Why? 

Open  an  account  with  Bills  Receivable  on  your  exercise  paper.  Then  enter  a 
record  of  the  following  example  in  this  account. 

Example  2. — Feb.  1,  19 — ,  Have  on  hand  several  notes  amounting  to  $3124.64.  Feb,  2,  Bought 
Brown's  note  for  $550.  Feb.  3,  Sold  Field  &  Co.  Mdse.  for  note,  $750.  Feb.  4,  J.  S.  Simms  sent  his 
note  on  account,  $560.50.  Feb.  5,  Received  cash  for  one  of  the  notes  held  at  first,  $124.64.  Feb.  7, 
Sold  a  house  and  lot  for  30  day  note,  $3000.  Feb.  9,  Sold  200  bu.  of  wheat  at  $0.75  per  bu.  for 
note,  $150.  Feb.  11,  Simms  pays  cash,  $260.50  on  his  note  of  the  4th  inst.  Feb.  14,  Sold  horse  and 
wagon  for  10  day  note,  amounting  to  $375.  Feb.  15,  Collected  cash  for  several  notes  now  due,  $2500. 
Feb.  16,  Balance  and  rule  up  the  account. 

BILLS  PAYABLE 


19— 
Feb. 


3 

14 
18 

20 


When  paidt 


Balance, 


475 
300 
800 

1575 

2625 

19- 
Feb. 

1 

2 

4 

15 

16 

4200 

\ 

Feb. 

20 

When   issued. 


Balance, 


475 

900 

300 

2500 

25 

4200 

4200 


V' 


2625 


Explanation. — When  our  notes  are  issued  they  are  entered  for  the  face  value 
on  the  Cr.  side;  and  when  they  are  redeemed  they  are  entered  for  the  face  value  on 
the  Dr.  side,  the  bala?ice  being  the  amount  we  owe  on  our  personal  promise  to 
pay.     The  debit  side  can  never  be  greater  than  the  credit  side. 

Trace  the  items  of  the  following  example  and  see  how  they  are  entered  in  the 
above  form : 

Example  3.— Feb.  1,  19—,  Gave  my  note  for  bill  of  goods,  $475.  Feb.  2,  Borrowed  at  bank 
$900,  for  which  I  gave  my  note.  Feb.  3,  Paid  cash  for  my  note  of  the  1st  inst.,  $475.  Feb.  4,  Bought 
a  horse  and  wagon  for  $300,  giving  my  note  at  10  days  for  same.  Feb.  14,  Paid  cash  for  my  note  of 
the  4th  inst.  Feb.  15,  bought  house  and  lot  for  $2500;  gave  my  note  at  3  mos.  in  payment.  Feb.  16, 
Gave  my  note  at  10  days  for  insurance  on  house,  $25.  Feb.  18,  Paid  cash  on  my  note  of  the  15th 
inst.,  $800.     Find  the  balance  of  notes  outstanding  Feb.  20, 


The  account  for  the  following  example  is  to  be  headed   "Bills  Payable." 

Example  4. — Feb.  10,  19 — ,  Gave  my  note  for  $328,60,  also  gave  my  note  to  another  party  for 
$178.75.  Feb.  11,  Gave  my  note  to  J.  B.  Smith  for  $298,50.  Feb,  12,  Paid  my  note  for  $178.75. 
Feb.  13,  Gave  my  note  to  M.  L,  Walker  for  $105.  Feb.  14,  Paid  my  note  favor  J.  B.  Smith  for 
$298.50.  Feb.  15,  Gave  my  note  to  A.  E.  Baker  for  $252.05.  Feb.  16,  Redeemed  my  note  given  on 
10th  inst.  for  $328.60.  Feb.  17,  Gave  my  note  to  J.  B.  Show  for  $51,55.  Feb.  18,  Redeemed  my  note 
favor  of  M.  L.  Walker  for  $105.  Find  the  balance  of  notes  outstanding  and  balance,  foot  and  rule 
up  the  account. 


PROMISSORY    NOTES  17 

QUESTIONS 

1.  What  ic  a  Bill  P:iyal.li-? 

2.  What  was  the  total  amount  of  notes  issued? 

3.  What  was  the  total  amount  redeemed? 

4.  Which  side  can  not  be  greater  than  the  other  side? 

EXERCISE   IV 

JOURNALIZING   BILLS  RECEIVABLE   AND   BILLS  PAYABLE 
To  the  Shident:     Read  the  following  information  relating  to  notes.     You  are  then 
ready  to  journalize  the  transactions  for  the  month  of  February.      Three  transactions 
are  given  as  models. 

PROMISSORY   NOTES 

A  Promissory  Note  is  a  written  promise  to  pay  a  certain  sum  of  money  at  a  speci- 
fied time  or  on  demand. 

Promissorv  notes  are  very  extensively  used  in  business,  and  serve  as  a  great  convenience  in 
transferring  indebtedness  from  one  person  to  another.  Thus,  suppose  Brown  owes  Smith  ?50U.  If 
the  debt  is  represented  by  Brown's  promissory  note.  Smith  can  readily  sell  the  paper,  or  discount  it 
at  his  bank,  and  realize  its  value,  without  waiting  until  it  falls  due. 

The  Parties  to  a  promissory  note  are  the  maker,  the  payee  and,  in  some  cases,  the 
tndorser. 

The  Maker  of  a  note  is  the  person  who  signs  it,  and  is  obligated  to  pay  it  when 
due. 

FORM  OF  PROMISSORY  NOTE 


^«-<?^<?2-^^;^^7i?-2^ 


The  Payee  is  the  person  to  whom  the  note  is  made  payable. 

An  Indorsement  is  any  writing  (usually  the  name)  upon  the  back  of  commercial 
paper,  either  for  the  purpose  of  guaranteeing  its  payment  or  transferring  its  title 


18 


MODERN    ACCOUNTANT 


The  person  who  writes  his  name  upon  the  back  of  the  paper  is  called  an  indorser,  and 
the  one  to  whom  the  paper  is  transferred  is  called  an  indorsee. 

The  Face  of  a  note  is  the  amount  named  in  the  note.  Thus  the  face  of  the  note 
shown  on  the  preceding  page  is  $200. 

Notes  are  made  to  fall  due  a  certain  number  of  days  after  date,  or  "On  demand"  or  "On  or 
before"  a  certain  date. 

Days  of  Grace  are  three  days  allowed  for  the  payment  of  notes  after  they  become 
due.  When  the  last  day  of  grace  falls  upon  Sunday  or  a  legal  holiday  the  paper 
matures  on  the  day  previous.  Days  of  Grace  are  not  considered  in  the  text,  as  they 
have  been  abolished  in  a  majority  of  the  states.  When  Days  of  Grace  are  not  allowed 
a  paper  falling  due  on  Sunday  or  a  holiday  is  due  the  following  day. 

The  Maturity  of  a  note  is  the  last  daj''  of  grace,  or  the  final  day  of  payment. 

Accommodation  Paper  is  one  that  is  given  to  aid  a  person  in  borrowing  money.  Thus  A  and 
B  exchange  notes.  A  can  then  sell  or  discount  B's  note  when  he  could  not  do  so  with  a  not-e  bearing 
his  name  alone.  Likewise  B  could  use  the  note  received  from  A.  The  person  who  receives  an 
accommodation  paper  and  uses  it,  is  expected  to  pay  it  at  maturity,  although  if  he  does  not  pay  it, 
the  person  who  accommodated  him  with  his  signature  will  have  to  pay  it. 

Other  Persons'  Notes  or  written  promises  to  pay  are  called  Bills  Receivable.  They 
are  so  called  because  we  will  receive  the  amount  named  at  maturity. 

Our  Notes  or  written  promises  to  pay  are  called  Bills  Payable.  They  are  so  called 
because  we  must  pay  the  amount  named  at  maturity. 

The  student  must  learn  to  distinguish  clearly  between  Bills  Receivable  and  Bills 
Payable.     This  may  be  done  by  carefully  studying  the  above  definitions. 

TRANSACTIONS  TO  BE  JOURNALIZED 

Rule    II. —  When  you  receive  ariother  person  s  ?iote,  yoii  should  Dr.   Bills  Receivable;   and 
when  you  dispose  of  that  note  Cr.  Bills  Receivable. 

Rule  III.  —  When  you  issue  your  note  you  should  Cr.  Bills  Payable,  and  when  you  redeem 
it  Dr.  Bills  Payable. 

Feb.  1,  19—.     Sold  Stephen  Johnson  on  his  note,  10  bbl.  Sugar  at  $8,  $80. 

We  have  received  a  Bill  Receivable,  hence  Bills  Rec.  is  Dr.  Mdse.  is  credited  as  in  the  previ- 
ous  exercise. 


19— 
Feb. 


11 


Bills  Rec, 


Mdse. 


Mdse., 


Bills  Pay. 


Bills  Pay. 


Cash, 


80 


60 


60 


80 


60 


60 


Feb.  2.     Bought  of  H.   Seymour  for  cash,  15  bbl.  Pork  at  $12,  $180;  300  bu. 
Corn  at  40^-,  $120.     Total  $300. 


TRANSACTIONS  jg 

Feb.  3.     Sold  to  Joseph  Burton  for  cash,  Stephen  Johnson's  note,  $80. 

Feb.  5.     Sold  to  S.  E.  Cooper  on  his  note,  40  bbl.  Pork  at  $12.50,  $500. 

Feb.  6.  Bou<,'ht  of  W.  K.  Nathan,  :|S7  bu.  Corn  at  'J(V,  $77.40;  500  bu.  Oats  at 
40^*,  $200;  200  bu.  Wheat  at  $1,  $200;  220  bu.  Rye  at  10^/,  $22.00.  Total  $500.  Gave 
in  payment  S.  E.  Cooper's  note,  which  I  received  on  the  5th  instant,  $500. 

Feb.  7.     Bought  for  cash  of  H.  W.  Seymour,  20  bbl.  Flour  at  $8,  $1(50. 

Feb.  8.  Bought  of  J.  Harrigan  on  my  note,  20  pieces  Merrimac  Prints  at  $3, 
$60. 

We  have  issued  our  Note,  which  is  Bills  Payable,  hence  Bills  Pay.  is  Cr.  Mdse.  is  debited  as 
in  the  previous  exercise. 

Feb.  10.      Borrowed  cash  of  J.  Steward  on  my  note,  $375. 

Feb.  11.     Paid  cash  for  my  note,  favor  of  J.  Harrigan,  $00. 

Feb.  12.  Bought  of  Thomas  King  on  my  note,  15  boxes  Cigars  at  $10,  $150;  10 
sacks  Coffee  at  $5,  $50;  0  boxes  Crackers  at  $2,  $12;  9  boxes  Toilet  Soap  at  $2,  $18. 
Total  $230. 

Feb.  13.  Bought  of  Charles  Humes,  House  and  Lot,  No.  195  Dearborn  avenue, 
for  $4000.  Gave  in  payment  my  notes  as  follows:  One  note  due  6  months  from 
date  for  $1400,  one  due  8  months  from  date  $1400,  and  one  due  12  months  from  date 
for  $1200.     Total  $4000. 

Feb.  15.  Sold  to  Henry  A.  Wise  on  his  note  at  00  days,  50  bu.  Corn  at  40^,  $20; 
7  boxes  Cigars  at  $10,  $70;  4  boxes  Toilet  Soap  at  $2.50,  $10.     Total  $100. 

Feb.  16.  Exchanged  notes  with  Warren  Spencer  for  our  mutual  accommoda- 
tion, each  made  for  $600. 

Feb.  17.  Sold  Charles  Fox,  25  bbl.  Pork  at  $8,  $200.  Received  in  payment  his 
note,  $200. 

Feb,  18.     Paid  cash  for  my  note  due  in  0  months  for  $1400. 

Feb.  19.  Bought  of  W.  Gordon,  0  shares  Railroad  Stock  at  $100,  $600.  Gave  in 
payment  Warren  Spencer's  note,  $000. 

Feb.  20.  Bought  of  Strong  &  Co.  on  my  note,  50  kegs  Nails  at  $4,  $200;  3  doz. 
Saws  at  $25,  $75;  6  doz.  hinges  at  $0,  $36.     Total  $311. 

Feb.  23.  Received  cash  of  Charles  Fox,  in  payment  of  his  note  of  the  17th 
instant,  $200. 

Feb.  24.  Paid  cash  for  my  note,  due  8  months  from  date,  favor  of  Charles 
Humes  for  $1400. 

Feb.  26.  Sold  to  Geo.  Walker,  4  shares  Railroad  Stock  at  $100,  $400.  Received 
in  payment  Samuel  Boyd's  note  indorsed  by  Geo.  Walker  for  $400. 

Write  the  promissory  note  mentioned  in  Feb.  15  with  6%  interest.  In  the 
absence  of  printed  forms,  write  the  note  upon  a  neatly  cut  slip  of  paper  about  3>2x8 
inches  in  size.  After  writing  in  the  name  of  the  payee,  amount,  etc.,  fill  the 
remaining  space  with  a  ruled  line,  in  order  that  no  room  may  be  left  wherein  words, 
letters  or  figures  may  be  afterwards  inserted,  thus  changing  or  "raising"  the  note. 

To  the  Student:  Present  for  approval  the  Journal  entries  for  the  above  transac- 
tions and  the  promissory  note  called  for.  Properly  rule  the  Journal.  When 
approved,  copy  in  permanent  Journal. 


20  MODERN    ACCOUNTANT 

EXERCISE   V 

ACCOUNTS   WITH    BILLS  RECEIVABLE   AND   BILLS   PAYABLE 

To  the  Student:  In  the  first  example  you  will  open  two  accounts;  in  the  second 
example  there  are  three  accounts  required.  The  number  following  the  title  of  the 
account,  as  11  in  "Bills  Receivable,",  represents  the  number  of  spaces  (lines)  that 
should  be  reserved  for  the  debit  and  credit  items.  Always  follow  instructions  given 
in  Exercise  I  as  to  balancing  and  ruling  up  an  account. 

Open  accounts  with  the  following:  Bills  Receivable,  11  lines;  Bills  Payable, 
10  lines.     Write  up  transactions  in  Ledger  form  for: 

Example  1. — On  Jan.  1,  19 — ,  a  firm's  Bills  Receivable  and  Bills  Payable  accounts  are  as  fol- 
lows: Bills  Receivable  on  hand  amount  to  $6400.75.  Bills  Payable  outstanding  amount  to  $3640.75. 
Jan.  4,  They  received  A.  B.  Jones'  note  for  $850.  Jan.  5,  Sold  Mdse.  to  W.  Marx  for  note  at  3  days, 
$546,75.  Jan.  6,  Bought  of  Wilson  &  Co.  Mdse.  for  note,  $1160.80.  Jan.  8,  Marx  paid  his  note  of 
the  5th  inst.  Jan.  9,  Sold  A.  N.  Palmer,  House  and  Lot  for  $5200,  received  in  payment  two  notes, 
one  for  $3200  and  one  for  $2000.  Jan.  10^  Paid  one  of  our  notes  amounting  to  $640.75.  Jan.  11,  Sold 
Mdse.  to  Durand  &  Co.  for  note,  $985.50.  Jan.  12,  Received  payment  for  note  held  by  us,  $2400.75. 
Jan.  15,  Paid  our  note  favor  Wilson  &  Co.,  $1160.80.  Jan,  16,  Palmer  paid  his  second  note  in  full. 
Jan.  20,  Bought  Mdse,  of  Field  &  Co.  for  note,  $1260.80.  Jan.  25.,  Paid  balance  of  first  notes  out- 
standing amounting  to  $3000.  Jan.  26,  Bought  real  estate  of  Brown  Bros,  for  our  note,  $4000.  Jan.  28, 
Sold  E.  L.  Coe  Mdse.  for  his  note,  $890.60.  Jan.  29,  Sold  to  bank  for  cash,  $850,  Jones'  note  re- 
ceived on  the  4th  inst.  Jan.  30,  Paid  our  note  favor  Field  &  Co.,  dated  20th  inst.,  also  our  note  for  real 
estate  given  on  the  26th  inst.  Our  Bills  Payable  account  now  balances.  What  is  the  balance  of 
the  Bills  Receivable  account? 

Open  the  following  accounts:  Bills  Receivable,  10;  Bills  Payable,  8,  and  Cash, 
10.  Do  not  abbreviate  the  heading  of  an  account.  Enter  the  following  transactions 
under  the  proper  heading.  You  will  observe  that  when  you  enter  an  item  on  the 
debit  side  of  an  account,  you  also  enter  an  equal  amount  on  the  credit  side  of  some 
other  account.     This  is  called  double  entry  in  bookkeeping. 

Example  2. — Feb.  19,  19 — ,  Borrowed  from  J.  C.  Briggs  $500  cash,  and  for  it  I  have  given  my 
note  for  the  same  sum.  (Dr.  "Cash"  and  Cr.  "Bills  Pay.")  Feb.  20,  Loaned  J.  A.  Stephens  $150 
cash,  receiving  his  note  for  same.  (Dr.  "Bills  Rec."  and  Cr.  "Cash.")  Feb.  21,  Gave  Chas.  Wise 
my  note  for  $15().50  and  took  his  note  for  a  like  sum.  Feb.  22,  Paid  J.  C.  Briggs  $200  cash  on  m\- 
note  of  the  19th  inst.  Feb.  23,  Loaned  T,  R,  Wheeler  $46.50  on  his  note;  also  loaned  M.  R.  Knapp 
$54.75  on  his  note.  Feb.  24,  J.  A.  Stephens  has  paid  his  note  of  the  20th  inst.  in  cash.  Feb.  25, 
Loaned  E.  M.  Lamson  $26.50,  for  which  I  have  taken  his  note.  Feb.  26,  Borrowed  $84.25  cash  from 
Chas.  Taylor  and 'gave  my  note  for  the  same.  Feb.  27,  Received  $46.50  from  T.  R.  Wheeler  for  the 
note  he  owes  us;  also  received  $54.75  from  M,  R.  Knapp  for  the  note  he  owes.  The  balances  are  as 
follows:  Bills  Receivable,  $**3;  Bills  Payable,  $***.75;  Cash,  $***.75.  Enter  these  balances  and 
rule  up  the  accounts. 

Query. — The  balance  of  Bills  Receivable  plus  the  balance  of  cash  equals  the  balance  of  Bills 
Payable.     Why? 

To  the  Student:  Present  these  exercises  properly  ruled  up  for  inspection.  When 
approved,  they  are  to  be  copied  in  your  permanent  Exercise  Book. 

aUESTIONS 

1.  How  do  you  open  an  account? 

2.  What  is  an  account? 

3.  What  does  an  account  with  cash   show? 

4.  What  does  an  account  with  merchandise  show? 


JOURNALIZING    SUNDRY    ITEMS 


21 


EXERCISE   VI 

JOURNALIZING   SUNDRY   ITEMS 

To  till-  Sfjtdcnt:     Write  up  the  Journal  for  the  following  transactions: 
An  Item  in  bookkeeping  is  any  distinct  or  separate  portion  of  an  entry. 
Sundries  is  a  term  used  to  signify  severalitcms^  either  debits  or  credits. 

The  student  will  have  occasion  to  become  better  acquainted  with  the  use  of  the  word  Sundries 
further  on  in  his  work,  when  posting  to  the  Ledger.  The  term  is  omitted  here  for  the  sake  of  sim- 
plicity, and  also  because  its  use  in  the  Journal  has  been  discarded  by  a  large  proportion  of  good  book- 
keepers. 

Rule  IV.  —  Wlicnevcr  yoti  receive  or  pay  out  more  tJian  one  thing,  as  Cash,  Mds".,  etc.,  write 
first  the  debit  item  or  items  one  under  the  other,  then  write  the  credit  item  or  items 
in  the  same  manner. 

March  1,  19—.  Sold  John  Smith,  100  bbl.  Flour  at  $7,  $700.  Received  in  pay- 
ment, cash,  $600;  his  note  at  30  days  for  balance,  $100. 

According  to  the  above  rule,  this  entry,  when  made,  will  appear  as  follows: 


Mar. 

1 

Cash, 
Bills  Rec, 

Mdse., 

GOO 
100 

700 

March  2.     Sold  John  Smith's  note  for  $100. 
merchandise  amounting  to  $75.     Total  $100. 

March  3.     Sold  William  Anderson  20  bbl.  Sugar  at  $18,  $360. 
ment  his  note  for  $200;  cash  for  balance,  $160. 

March  4.     Bought  of  Henry  Turner,  20  bbl.  Flour  at  $8,  $160. 
$60;  my  note  at  60  days  for  $100.     Total  $160. 

The  above  entry  will  be  made  as  follows: 


Received  in  payment  cash,  $25; 
Received  in  pay- 
Paid  him  cash. 


Mar. 

4 

•Mdse., 

Cash, 
Bills  Pay., 

160 

60 
100 

March  4.     Bought  of  James  Dennis,  5  shares  Bank  Stock  at  $200,  $1000.     Paid 

him  note  at  90  days  for  $200;  1000  bu.  Wheat  at  60^-,  $600;  cash   for  balance,  $200. 

March  5.     Sold  T.  R.  Camp,  2  shares  Bank  Stock  at  $200,  $400;  20  bbl.  Flour 

Received  in  payment  cash  in  full,  $600. 
C.  W.  Coleman,  200  bu.  Corn   at  40^,  $80;  5  shares  Rail- 
Total  $680.     Paid  for  same  my  note  at  30  days,  drawing 


at  $10,  $200.     Total  $600. 

March  6.  Bought  of 
road  Stock  at  $120,  $600. 
7%  interest. 

March  7.     Paid  Henry  Turner  for  my  note  of  the  4th  inst.,  $100. 
10  bbl.  Pork  at  $5,  $50.     Total  $100. 


Cash,  $50; 


22 


MODERN    ACCOUNTANT 


March  9.  Sold  R.  Brandon,  50  bbl.  Flour  at  $5,  $250;  1  share  Bank  Stock,  $200. 
Total  $450.  Received  in  payment  10  bbl.  Pork  at  $10,  $100;  his  note  at  30  days 
for  $200;  cash  for  balance,  $150.     Total  $450. 


Mar. 


Mdse., 
Bills  Rec, 
Cash, 


Mdse., 
Bank  Stock, 


100 
200 
150 


250 
'     200 


March  10.  Bought  of  C.  O.  Godfrey,  House  and  Lot  for  $1200;  50  bbl.  Fish  at 
$7,  $350.  Total  $1550.  Paid  him  2  shares  Bank  Stock  at  $200,  $400;  50  bbl.  Pork 
at  $10,  $500;  R.  Brandon's  note  for  $200;  my  note  for  $200;  cash    for   balance,  $250. 

March  15.  Sold  House  and  Lot  purchased  on  the  10th  inst.  for  $1500.  Received 
in  payment  Stock  of  goods  for  $1200;  James  Andrew's  note  for  balance,  $300. 

March  18.  Paid  my  note,  favor  of  C.  O.  Godfrey,  for  $200.  Gave  100  bu.  Corn 
at  60^-,  $00;  cash  for  balance,  $140. 

March  20.     Loaned  James  Hunter  cash  on  his  note,  $800, 

March  25.  Sold  Thomas  Kennedy  on  his  note,  300  bu.  Corn  at  500,  $150;  200 
bu.  Wheat  at  $1.25,  $250;  40  bbl.  Pork  at  $10,  $400;  300  bbl.  N.  Y.  Salt  at  $2,  $C00. 
Tatal  $1400. 

March  26.  Received  cash  of  Thomas  Kennedy  for  his  note  of  the  25th  inst., 
$1400. 

March  27.  Sold  to  Amos  Duncan  500  bbl.  Flour  at  $6,  $3000;  20  shares  Union 
Bank  Stock  at  $100,  $2000.  Total  $5000.  Received  in  payment  cash,  $1000;  James 
Anderson's  note  for  $2000;  his  note  at  90  days  for  balance,  $2000. 

Write  the  promissory  note  in  March  6,  making  it  payable  at  Union  National 
Bank. 

To  the  Studeyit:     Present  j'our  work  properly  ruled  for  approval. 

EXERCISE   VII 

ACCOUNTS   WITH  PERSONS 

To  the  Student:  Read  over  the  introductory  matter  and  write  up  the  Examples 
given,  viz.  :   1,  2,  3  and  4. 

Personal  Accounts  are  those  which  are  opened  with  persons,  firms  or  corporations. 
The  object  of  personal  accounts  is  to  show  what  we  owe  others  and  what  they 
owe  us. 

*<0n  account"  signifies  the  same  as  on  credit,  and  means  that  the  transaction  is 
evidenced  by  an  entry  upon  the  books,  and  not  by  a  note  or  other  written  agreement. 

A  Bill  is  a  written  statement  of  goods  sold  or  services  rendered,  showing  the 
amount  and  price  of  each  article,  term-s  of  sale,  etc.  A  Bill  is  "receipted"  by  writ- 
ing the  words  "Received  payment,  "the  date  and  the  seller's  name  at  the  bottom.    A 

part  may  be  credited  upon   the  bill   by  writing  the  words  "Cr.   by  Cash  $ "or 

"Cr.  by  Note  30  days  $ " 


ACCOUNTS    WITH    PERSONS 


23 


If  Brown  should  come  into  your  store,  buy  a  bill  of  goods,  and  not  pay  for  them, 
you  would,  of  course,  debit  or  charge  him  on  your  books.  Later,  if  he  should  call 
and  pay  you,  you  would  credit  him.  If  you  should  go  into  Brown's  store  and  buy 
goods  on  account,  you  should  credit  Brown  on  your  books,  for  you  owe  him;  he  is 
your  creditor  and  you  are  his  debtor.  If  you  should  now  pay  him,  you  should  debit 
him,  for  you  have  gone  out  of  his  debt. 

Let  us  apply  these  principles  to  the  following  exercises: 

Dealings  with  Edgar  Hart,  Hammond,  Ind.  : 

Example  1.— April  1,  19—,  Sold  him  a  bill  of  {:roceries  amounting  to  $24.60.  Ajiril  2,  Sold  him 
kerosene  $0.50.  April  5,  He  paid  me  on  account  $7.50.  April  8,  He  worked  for  nie  one  week  for 
$:5.50.  April  12,  Sold  him  20  gal.  vinegar  for  $4.  April  15,  Loaned  him  horse  and  wagon  for  one 
week  for  $7.  April  18,  He  paid  me  on  account  $6.50.  April  20,  Sold  him  groceries  amounting  to 
$8.40.     April  25,  He  paid  me  on  account  $20.     How  does  our  account  with  him  stand  on  April  .'W? 

Trace  the  above  transactions  through  the  following  form: 


EDQAR  HART 


Hammond,  Ind. 


19- 

19— 

April 

1 

2 

12 

15 

He  owes  us, 

24 

4 

7 

60 
50 

April 

5 

8 
18 
25 

]Ve  owe  him. 

7 

3 

6 

20 

50 
50 
50 

20 

8 

40 

30 

Balance,         -     * 

s' 

37 

7 

50 

41 

5  0 

Balance, 

44 

50 

*  Red  Ink  Entry. 

44 

50 

May 

1 

V^ 

i        -7 

Explanation. — Enter  what  he  owes  us  on  the  debit  side  (Dr.),  that  is,  charge 
him,  and  enter  what  he  gives  us  on  the  credit  side  (Cr.).  The  diflference  is  the  bal- 
ance and  in  this  case  shows  that  Edgar  Hart  owes  us  $7. 

Dealings  with  James  Brown,  Clinton,  Iowa: 

Example  2. — April  1,  19 — ,  I  bought  of  him  on  account,  a  bill  of  merchandise  amounting  to 
$1334.50.  April  8,  I  paid  him  cash  on  account,  $500.  April  15,  Bought  of  him  Mdse.  on  account, 
$745.75.  April  17,  Paid  him  cash  on  account,  $500.  April  19,  Returned  to  him  unsatisfactory  Mdse. 
bought  on  the  15th,  $145.75.  April  21,  Bought  Mdse.,  10  days,  $375.60.  April  27,  Paid  him  cash  on 
account,  $300.     April  30,  The  balance  due  James  Brown  is  $****.10.     Close  the  account. 

Dealings  with  J.  S.  Gridley,  Aptakisic,  N.  Y.,  farmer,  are  as  follows: 

Example  3. — On  April  1,  19 — ,  He  owes  me  a  balance  of  $34.75;  on  the  same  day  he  pays  us  on 
account  $10.  April  2,  We  buy  of  him  56  lb  of  butter  at  16^  per  tb.  April  5,  He  buys  of  us  14  It) 
cheese  at  18/  per  tb;  24  ft  sugar  at  4>^^  per  lb;  3  lb  tea  at  62^4/  per  lb;  4  H)  coffee  at  18,^4 ','•  per  %. 
April  10,  He  paid  us  cash  $8.40.  April  15,  We  gave  him  an  order  on  a  city  merchant  for  $26.  April 
15,  He  sold  us  2  quarters  of  beef,  total  weight  198  lli,  at  6 '4'/  per  tli.  April  20,  We  sold  him  7  milk 
cans  at  $7  each.  April  30,  He  settles  his  account  by  paying  us  cash  in  full  of  account.  Total  and 
rule  up  the  account. 

Dealings  with  Oliver  Wilson  and  William  Johnson,  both  of  Avon,  111. 
Keep  an  account  with  each  party.     Wilson's  account  will  require  12  lines,  and 
Johnson's  11  lines. 

Example  4. — Aug.  1,  19—,  Sold  Wilson  2  tons  coal  at  $7,  $**.  Aug.  2,  Bought  of  Johnson  4 
tons  hay  at  $6,  $**.     Aug.  3,  Sold  Wilson  3  tons  feed  at  $9.     Aug.  4,  Received  from  Wilson  cash  on 


24 


MODERN    ACCOUNTANT 


account,  $20,  and  on  same  day  paid  Johnson  cash  on  account,  $15.  Aug.  5,  Bought  of  Johnson  125 
bu.  of  oats  at  2^4;  same  day  sold  Wilson  23  bu.  of  oats  at  30f.  Aug.  7,  Wilson  has  done  work  for  us 
amounting  to  $34,  which  is  to  apply  on  his  account.  Aug.  9,  Paid  Johnson  cash  on  a,ccount,  $5. 
Aug.  10,  Sold  Johnson  2  tons  coal  at  $7.50.  Aug.  11,  Bought  of  Johnson  50  bbl.  apples  at  $1.25. 
Aug.  15,  Borrowed  of  Johnson  cash,  $40.  Aug.  IG,  Paid  Wilson  cash  in  full  of  account,  $*.**.  Foot 
and  rule  up  Wilson's  account.  Aug.  17,  Sold  Wilson  3  tons  hay  at  $8.  Aug.  20,  Sold  Johnson  2 
tons  coal  at  $7,50.  Aug.  21,  Returned  to  Johnson  money  borrowed  of  him  on  the  15th  inst.  Aug. 
22,  Bought  of  Johnson  2  tons  hay  at  $9,  and  immediately  sold  same  to  Wilson  at  $10,  Aug.  24, 
Received  from  Wilson  cash  $25,  which  sum  I  paid  to  Johnson.  Balance  and  rule  up  the  two 
accounts.     Wilson's  balance  is  $**;  Johnson's  balance  is  $60.75. 

aUESTIONS 

1.  What  is  a  personal  account? 

2.  What  does  "on  account"  mean? 

3.  Which  side  of  a  personal  account  may  be  the  greater? 

4.  What  does  the  balance  of  Hart's  account  show? 

How  to  Forward  an  Account — It  frequently  happens  that  all  the  items  of  an 
account  can  not  be  placed  on  the  same  page,  and  it  becomes  necessary  to  forward  the 
account  to  some  other  page.  You  will  therefore  use  the  following  forms  in  forward- 
ing footings: 


WILLIAM  JOHNSON 


Page  5 


•19— 

Aug. 

4 
5 

Cash  on  account, 
Amt.  ford., 

19 

15 

19— 
Aug. 

2 
5 

5 

4  tons  Hay  f»  $6.00, 
125  bu.  Oats  @  .25, 

Amt.  ford., 

19 

24 
31 

25 

15 

55 

25 

1 

WTLIilAM  JOHNSON 


Page  19 


19— 
Aug. 


Amt.  ford., 


5 

15 

19— 
Aug. 

5 

Amt.  ford., 


55 


To  the  Student:     Have  the  above  four  examples  approved  and  then  copy  them  in 
your  Exercise  Book. 

EXERCISE   VIII 

JOURNALIZING  PERSONAL  ACCOUNTS 

To  the  Student:     You  may  journalize  the  following  transactions,  first  observing  the 
model  entries. 

Rule   V.  —  When  you  owe  a  person,  or  when  a  person  pays  you  an  account,  Cr.  that  person. 

Rule  VI, — When  a  person  owes  you,  or  when  you  pay  a  person  on  account,  Dr.  that  person. 

April  1,  19 — .     Bought  of  Henry^  Wilson,  Mdse.  amounting  to  $1250,  for   which 
I  owe  him  on  account 


TRANSACTIONS 


25 


"  On  account"  is  the  same  as  "on  credit."     Henry  Wilson  is  credited.     (See  form  below.) 
April  2.      Sold    R.  Ranks,  Mdse.  amounting   to  $500,  for  which  he  owes  me  on 


account. 


19— 

Apr. 


Mdse. 


Henry  Wilson, 


R.  Banks, 


Mdse., 


1250 


500 


1250 


500 


April    3.      Bought  of  David  Jones,  on  account,  50  bbl.  Flour  at  $6,  $300. 

April    6.      Received  of  R.  Banks,  cash  on  account,  $250. 

April    7.      Paid  Henry  Wilson,  cash  on  account,  $500. 

April    8.     Sold  W.  Lyman  on  account,  Mdse.  amounting  to  $600. 

April  10.  Sold  R.  Davis  J.  A.  Cooper's  note  at  30  days,  for  which  he  paid  me 
cash,  $200. 

April  11.      Paid  David  Jones  on  account,  my  note  at  60  days  for  $200. 

April  12.  Paid  Henry  Wilson  on  account,  cash,  $300;  also  paid  David  Jones  on 
account,  cash,  $100.     Total  $400. 

April  13.  Bought  of  S.  Dunn,  Mdse.  on  account,  $500;  also  bought  of  H.  War- 
ren, Mdse.  on  account,  $450.     Total  $950. 

April  15.  Paid  S.  Dunn  on  account  my  note  at  30  days,  for  $200,  payable  at 
First  National  Bank,  6%  interest. 

April  17.  Paid  Henry  Wilson  on  account,  James  Berry's  note  for  $200;  also  my 
note  at  30  days  for  $100.      Total  $300. 

April  18.  Received  of  R.  Banks  on  account,  my  note,  favor  of  John  Simmons, 
for  $200. 

April  20.  R.  Wilson  has  this  day  assumed  the  balance  due  from  W.  Lyman, 
$400. 

When  a  person  assumes  the  debt  of  another,  Dr.  him,  and  credit  the  person  who  is  thereby 
released  from  the  obligation. 

April  21.  Sold  A.  D.  Campbell,  a  bill  of  goods  for  $235.  Received  in  payment 
James  H.  Smith's  note  his  favor,  $235. 

April  23.  Paid  Henry  Wilson  on  account,  my  note  at  90  days  for  $100;  also 
William  King's  note  for  $50.     Total  $150. 

April  24.  Sold  A.  A.  Blair,  on  account,  15  bbl.  Flour  at  $6.50,  $97.50;  20  bbl. 
Pork  at  $9.75,  $195;  GOO  bu.  Corn  at  35^,  $210;  100  bbl.  Salt  at  $1.75,  $175.  Total 
$677.50. 

April  25.  Received  from  A.  A.  Blair  to  apply  on  his  account  his  note  at  15 
days  for  $175,  M.  F.  Deale's  note  at  30  days  for  $230,  and  cash  for  the  balance  of 
his  purchase  of  yesterday. 

April  25.  Bought  of  C.  O.  Smith,  10  shares  Union  Bank  Stock  at  $100,  $1000. 
Gave  in  payment  my  note  at  10  days  drawing  6%  interest  for  $400;  cash  $600. 

April  26.  Borrowed  of  C.  Fraser  on  account  $160  cash  to  be  returned  in  ten 
days. 


26 


MODERN    ACCOUNTANT 


April  28.     Paid  M.  L.  Walker  cash  on  account  $5G;    also  for  our  note  of  $75  due 
to-day.     Total  $131. 

April  30.     Journalize  the  following  bill  as  Mason  &  Osgood's  bookkeeper: 


TVkw   York.             ^^.^^^^  /^ 

-19 

d/                                                                   / 

TERMS-! 

BOUGHT  OF  Mason   &   Osgood. 

10  DATS. 

^ 

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April  30.     Journalize  the  above  as  John  King  &  Co.  's  bookkeeper. 
Write  the  bill  for  April  24. 


To  the  Student:     Present  your  work  for  approval  and  then  copy  in  permanent 
Journal. 


ELEMENTS  OF  THE  SCIENCE  OF  ACCOUNTS 


What  is  Value? 

Value  is  the  ratio  existing  between  different  commodities  or  services  with  refer 
ence  to  exchange. 

What  is  a  Business  Transaction? 

A  Business  Transaction  consists  in  the  exchange  of  values. 

What  is  Bookkeeping? 

Bookkeeping  is  a  systematic  method  of  recording  business  transactions,  and  is 
divided  into  two  kinds,  distinguished  as  Single  Entry  and  Double  Entry. 

What  is  Single  Entry  Bookkeeping? 

Single  Entry  is  a  method  of  keeping  accounts  in  which  there  is  only  one  debit  or 
one  credit  to  a  business  transaction.  Personal  accounts  are  the  only  ones  usually 
carried  to  the  Ledger. 

What  is  Double  Entry  Bookkeeping? 

Double  Entry  is  a  method  in  which  every  business  transaction  produces  both  a 
debit  and  credit  of  equal  amount  in  the  Ledger. 

Which  method  is  considered  preferable? 

Double  Entry  is  preferable,  because  it  furnishes  a  more  complete  business  record, 
and  leaves  less  liability  for  errors  and  omissions. 

Define  Debit  and  Credit. 

Debit  and  Credit  are  terms  used  to  express  the  relation  which  exists  between  per- 
sons or  commodities  that  enter  into  any  business  transaction.  The  simplest  mean- 
ing of  debit,  is  to  charge ;  and  of  credit,  is  to  trust. 

What  are  Resources? 

Resources  or  assets  are  property  of  any  kind  belonging  to  the  business;  such  as 
cash,  merchandise,  real  estate,  notes  payable  to  the  firm,  etc. 

What  are  Liabilities? 

Liabilities  are  debts  owing  by  the  business,  such  as  notes  outstanding,  etc. 

What  are  Gains  and  Losses? 

Gains  and  Losses  are  terms  used  to  express  some  change  in  the  quantity  or  value 
of  the  assets  or  liabilities  of  the  business.  Gains  arise  from  an  increase  in  the  value 
of  the  assets  or  a  decrease  in  the  liabilities.  Losses  arise  from  a  decrease  in  the 
value  of  the  assets  or  an  increase  in  the  liabilities. 

What  is  Capital? 

Capital  is  the  excess  of  one's  assets  over  his  liabilities. 

27 


28  MODERN    ACCOUNTANT 

What  is  Insolvency? 

Insolvency  is  the  excess  of  one's  liabilities  over  his  assets. 

What  is  Cash? 

CasJi  is  a  title  used  to  designate  money.  We  include  under  it  currency,  bank 
drafts,  checks,  sight  drafts,  postal  orders,  express  orders,  etc. 

What  is  Merchandise? 

McrcJiandisc  includes  all  goods  and  wares  dealt  in  by  the  concern  as  a  business, 
and  which  are  in  store. 

What  are  Bills  Payable? 

Bills  Payable  are  our  notes  or  written  obligations  which  others  hold,  for  which  we 
are  to  pay  a  certain  amount  when  due. 

What  are  Bills  Receivable? 

Bills  Receivable  are  others'  notes  or  written  obligations  which  we  hold,  for  which 
we  are  to  receive  a  specified  sum  when  due. 

What  is  Bank  Stock? 

Bank  Stocky  railroad  stock,  etc.,  denotes  shares  in  such  corporations.  Stocks  of 
all  kinds  are  bought  and  sold  at  their  market  value. 

What  is  Real  Estate? 

Real  Estate  is  a  name  given  to  houses  and  lands.  , 

What  is  Shipment? 

Shipfnefit  or  consignment  is  a  name  given  to  merchandise  which  we  send  away  to 
an  agent  or  commission  merchant  to  sell  for  us.  This  is  to  distinguish  between 
property  in  store  and  out  of  store. 

What  are  Interest  and  Discount? 

Interest,  Disconnt,  premium  or  exchange,  are  allowances  which  we  make  to  others, 
or  others  make  to  us,  usually  with  reference  to  commercial  paper. 

How  do  we  indicate  that  an  Account  is  Debited? 

We  show  that  a?i  Account  is  Debited  by  placing  the  amount  on  the  left,  or  Dr.  side 
of  the  account. 

How  do  we  indicate  that  an  Account  is  Credited? 

We  show  that  an  Account  is  Credited  by  placing  the  amount  on  the  right,  or  Cr. 
side  of  the  account. 

How  do  we  know  what  to  Debit  and  what  to  Credit? 

We  Debit  what  costs  value  and  Credit  what  produces  value. 

How  are  the  terms  applied? 

The  following  List  comprises  all  the  conditions  to  which  the  terms  debit  and  credit 
apply: 

Debits. 

1.  Cash  received.  5.  Capital  withdrawn. 

2.  Others'  notes  received.  6.  Any  loss. 

3.  Our  notes  redeemed.  7,  Any  valuable  thing  received. 

4.  What  others  owe  us.  8.  Any  valuable  thing  invested. 


ELEMENTS    OF    THE    SCIENCE    OF    ACCOUNTS  29 

Crkdits. 

1.  Cash  paid.  5.  Capital  invested. 

2.  Others'  notes  disposed  of.  (5.  Returns  or  gains. 

3.  Our  notes  issued.  7.  Any  valuable  thing  disposed  of. 

4.  What  we  owe  others.  8.  Any  valuable  thing  withdrawn. 

What  should  be  the  conditions  of  debits  and  credits? 

The  Debit  or  debits  must  always  equal  in  amount  the  credit  or  credits. 

Are  the  number  and  form  of  the  books  used  in  business  always  the  same? 

Tluv  arc  nut,  but  are  modified  to  suit  the  requirements  of  each  particular  case. 
The  principles  of  bookkeeping,  however,  are  never  changed. 

What  is  a  Book  of  Original  Entry? 

A  Book  of  Original  Entry,  as  its  name  implies,  is  one  in  which  the  entry  is  first 
made. 

What  other  books  of  Original  Entry  are  there  besides  the  Day  Book? 

When  the  purposes  of  record  are  best  served  by  separating  and  classifying  the  trans- 
actions at  the  very  outset  it  is  usually  done  through  special  books,  such  as  the  Cash 
Book,  containing  the  record  of  receipts  and  disbursements  of  cash;  the  Sales  Book, 
containing  all  sales  of  goods;  the  Invoice  Book,  containing  all  purchases,  etc. 

What  is  the  use  of  the  Journal? 

The  Journal  \^  used  to  facilitate  the  transfer  of  the  Day  Book  entries  to  the  proper 
side  of  their  respective  accounts  in  the  Ledger.  It  may  also  be  a  book  of  original 
entry  by  supplying  proper  explanations  to  each  entry. 

What  is  Journalizing? 

Journalizing  is  the  process  of  transferring  entries  from  the  books  of  original  entry 
to  the  Journal. 

What  is  the  Ledger? 

The  Ledger  i"?,  the  reservoir  of  accounts;  the  receptacle  of  debits  and  credits  from 
all  other  books. 

What  is  an  Auxiliary  Book? 

An  Auxiliary  Book  is  one  which  is  subordinate  to,  and  independent  of,  the  other 
books  of  the  set.  It  is  kept  as  a  book  of  reference,  and  its  entries  are  not  transferred 
to  any  other  book.  The  Memorandum  Book,  Check  Book  and  Private  Ledger  are 
examples  of  auxiliary  books. 

QUESTIONS  FOB  REVIEW 

1.  In  what  does  Journalizing  consist?  2.  What  must  be  the  condition  of  the  debits  and  credits 
in  every  Journal  entry?  \\.  How  many  forms  of  Journal  entries  are  there?  4.  What  are  they? 
5.  What  is  the  General  Rule  for  Journalizing?  6.  Under  what  name  are  Beef,  Flour,  Pork,  etc., 
entered?  7.  How  do  you  enter  Houses  and  Lands?  8.  In  case  you  purchase  Bank  Stock  what  do 
you  debit?  9.  What  is  a  Promissory  Note?  10.  How  many  parties  are  there  to  a  Promissory  Note, 
and  what  are  they?  11.  Who  is  the  maker?  12.  Who  is  the  payee?  13.  Who  is  an  indorser? 
14.  What  is  the  purpose  of  writing  the  payee's  name  upon  the  back  of  the  note?  15.  How  many 
days  of  grace  have  notes?  16.  When  is  the  maturity  of  a  note?  17.  What  is  a  Bill  Receivable? 
18.  What  is  a  Bill  Payable?  19.  When  you  receive  another  person's  note  what  do  you  debit? 
20.  When  you  dispose  of  that  note  what  do  you  credit?  21.  When  you  issue  your  note  what  do  you 
credit?  22.  When  you  redeem  that  note  what  do  you  debit?  23.  What  is  an  item  in  bookkeeping? 
24.  What  is  the  meaning  of  the  word  Sundries? 


ACCOUNTS 


EXERCISE   IX 


POSTING  AND   TAKING   A    TRIAL  BALANCE 

To  the  Stndc7it:  You  will  closely  follow  the  following  plan  in  writing  up  this 
exercise,  as  it  consists  of  several  distinct  parts.  Have  your  work  for  each  step 
approved  before  attempting  the  next. 

First,  Journalize  transactions  for  January  as  per  form  given  on  page  32. 

Second,   Open  Ledger  heading  as  directed  on  page  32. 

Third,  Transfer  all  debit  and  then  all  credit  items  to  their  proper  Ledger 
accounts  as  per  directions  on  page  33.     See  "Directions  for  Posting." 

Fourth,   Take  a  trial  balance  as  directed  on  page  30. 

Caution. — At  the  end  of  each  step  you  will  have  papers  approved,  after  which 
they  will  be  copied  in  permanent  blank  books.  Follow  these  instructions  in  all  sub- 
sequent work. 

An  Account  is  an  item  or  group  of  items,  under  a  proper  heading  or  title,  so 
arranged  as  to  show  a  result  of  some  department  of  the  business. 

The  Ledger  is  the  book  in  which  accounts  are  kept.  The  items  in  the  Ledger  are 
transferred  to  it  from  some  other  book  in  which  the  transactions  are  entered  in  the 
order  of  their  dates  or  occurrence.  The  process  of  making  such  transfer  of  items  to 
the  Ledger  is  called  posting. 

The  Ledger  Heading  or  Title  is  the  name  under  which  the  account  is  kept.  Thus 
'"'Cash"  is  a  title  under  which  we  keep  a  record  of  all  money  received  and  paid  out. 
*^Mercha?idise"'  is  a  title  under  which  is  kept  an  account  of  goods  bought  and  sold, 
etc.  The  title  of  the  account  given  below  is  William  Wilso?i.  The  titles  or  Ledger 
headings  are  always  the  same  as  the  names  of  the  items  in  the  Journal. 


FORM  OF  LEDGER  ACCOUNT 


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Debit  and  Credit.     Every  account  is  divided  into  two  parts  or  sides  by  a  double 
vertical  line  in  the  center.     The  left  side  is  called  the  debit  side,  and  the  right  side  is 

30 


TRANSACTIONS  31 

f 

called  the  credit.     The  account  is  debited  by  placing  an  entry  upon  the  left,  or  Dr. 
side,  or  is  credited  by  placing  an  entry  upon  the  right,  or  Cr.  side. 

The  single  horizontal  line  is  called  the  title  line.  The  first  two  columns  on  either 
side  are  the  di7tc  columns,  for  year,  month  and  day — the  year  being  written 
just  above  the  month  below  the  headline.  The  wide  column  next  to  the  date  line  is 
for  an  explanation  of  the  entry.  The  next  column  to  the  right  is  the  folio  column, 
in  which  is  placed  the  page  of  the  book  from  which  the  item  is  transferred.  This  is 
necessary  for  the  sake  of  reference.  The  columns  in  which  dollars  and  cents  are 
written  are  called  money  columns. 

TRANSACTIONS  TO  BE  JOURNALIZED 

(See  model  on  next  page.) 

Jan.  1,  19 — .  Student  (your  name)  has  this  day  commenced  business  with  £  cash 
capital  of  $2000. 

Jan.  2.  Bought  of  Merriam,  Collins  &  Co.  for  cash,  200  lb  Butter  at  25^-,  $50; 
75  lb  Maple  Sugar  at  15^,  $11.25;  25  lb  Black  Tea  at  40^,  $10;  25  lb  Java  Coffee 
at  18^,  $4.50;  250  doz.  Eggs  at  15^,  $37.50.     Total  $113.25. 

Jan.  3.  Bought  of  A.  W.  Dudley  &  Co.  on  my  note  at  6%  interest,  50  bbl. 
Patent  Flour  at  $5.50,  $275;  75  bbl.  Apples  at  $1.75,  $131.25;  150  bu.  Peach  Blow 
Potatoes  at  80?5,  $120.     Total  $526.25. 

Jan.  4.  Sold  to  William  D.  Jackson  for  cash,  50  lb  Butter  at  35r/-,  $17.50;  25 
bbl.  Patent-Flour  at  $5.75,  $143.75;  20  bbl.  Apples  at  $2,  $40.     Total  $201.25. 

Jan.  6.  Bought  of  Chas.  H.  Fox,  Los  Angeles,  Cal.,  for  cash,  200  boxes  Cali- 
fornia Grapes  at  25^,  $50;  50  boxes  Oranges  at  $1.60,  $80.     Total  $130. 

Jan.  8.  Sold  to  James  Duncan.  Baltimore,  on  account,  100  Hb  Butter  at  32<;i, 
$32;  200  doz.  Eggs  at  16^/-,  $32;  100  bu.  Peach  Blow  Potatoes  at  75^,  $75;  25  bbl. 
Apples  at  $2. 10,  $52. 50.     Total  $191. 50. 

Jan.  9.     Received  from  James  Duncan  on  account,  cash  $100. 

Jan.  10.  Bought  of  Jas.  Gamage  &  Co.,  100  boxes  California  Grapes  at  40^,  $40; 
50  boxes  Oranges  at  $2,  $100;  25011:)  Maple  Sugar  at  20^,  $50;  25  lb  Black  Tea  at 
50^,  $12.50.  Total  $202.50.  Gave  in  payment  cash  $50;  my  note  at  30  days  for 
balance,  $152.50. 

Jan.  13.  Paid  A.  W.  Dudley  &  Co.  for  my  note  of  the  3d  inst.  Face  of  note 
$526.25.  Gave  in  payment  50  boxes  Oranges  at  $2.25,  $112.50;  100  boxes  California 
Grapes  at  50^/,  $50.     Total  $162.50;  cash  for  balance,  $363.75. 

Jan.  15.     Paid  cash  for  rent  of  store  for  current  month,  $50. 

"Expense"  is  the  debit  term. 

Jan.  16.  Bought  of  Washburn  &  Co.,  Minneapolis,  on  account,  50  bbl.  Min- 
nesota White  Wheat  Flour  at  $5.60,  $280.     Paid  cash  for  freight  on  same,  $11.40. 

Jan.  18.  Bought  of  A.  W.  Hammond  on  account,  a  burglar  proof  safe  for  my 
office,  $100. 

Debit  "Fixtures"  for  this  transaction. 

Jan.  20.  Received  of  James  Duncan  cash  $25,  and  his  draft  on  A.  S.  Dow  at 
10  days'  sight  for  $50,  to  apply  on  account. 


32 


MODERN    ACCOUNTANT 


Jan.  20.  Sold  to  Thompson  &  Smith  on  account,  25bbl.  Minnesota  White  Wheat 
Flour  at  $6,  $150;  50  doz.  Eggs  at  22^',  $11;  50  bu.  Peach  Blow  Potatoes  at  75^', 
$37.50.     Total  $198.50. 

Note. — It  is  not  thought  necessary  to  give  special  rules  for  Fixtures  and  Expense 
at  the  present  time.  The  general  rule  covers  the  case  until  a  special  rule  becomes 
desirable.  The  student  should  be  able  to  formulate  all  special  rules  from  the  gen- 
eral rule  already  given. 

First  Step 


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Second  Step 

OPENING  ACCOUNTS 

The  proprietors'  or  partners'  accounts  should,  for  convenience,  always  appear 
first  in  the   Ledger.     This  account  is  followed  by  the  representative  accounts   and 


DIRECTIONS    FOR    POSTING  33 

lastly  appear  the  real  accounts.  As  matter  of  taste,  accounts  upon  opposite  pages 
should  be  placed  exactly  opposite  each  other,  whcie  it  can  be  done  conveniently. 
Ledger  headings  should  be  written  in  a  plain,  strong  hand,  slightly  shaded.  Never 
attempt  any  flourish  or  ornamentation  in  your  Ledger.  Never  abbreviate  Ledger 
headings  unless  a  personal  account,  and  then  you  should  be  governed  by  the  manner 
in  which  the  person  signs  his  name.  Be  accurate  in  this.  P.  Smith  is  not  Peter 
Smith,  and/.  Broivn  is  very  different  from/.  Broivn  &  Co.  An  account  with  one  may 
be  zvorthless  and  with  the  other  Ai.  The  heading  of  a  personal  account  should 
always  include  the  address. 

Open  an  account  in  the  Ledger  with  the  proprietor  of  the  business  (who  is,  in 
this  case,  yourself)  by  writing  your  name  upon  the  title  line,  instead  of  Sttidcnt.  at 
the  head  of  the  first  page  of  the  Ledger.  Some  bookkeepers  use  the  term  Stock 
instead  of  the  proprietor's  name. 

Eight  lines  below  the  proprietor's  account,  open  a  "Merchandise"  account,  10 
lines  lower,  one  with  "Expense,"  and  8  lines  lower,  one  with  "Fixtures." 

At  the  top  of  page  2  open  an  account  with  "Cash;"  8  lines  lower,  one  with 
"Bills  Payable,"  and  8  lines  lower,  one  with  "Bills  Receivable." 

Each  of  the  following  accounts  to  have  8  lines:  James  Duncan,  Baltimore, 
Md.  ;  Washburn  &  Co.,  Minneapolis;  A.  W.  Hammond,  and  Thompson  &  Smith. 

If  necessary  to  increase  or  diminish  this  number  slightly  at  the  bottom  of  a  page, 
to  suit  the  length  of  the  page,  this  should  be  done  so  that  an  account  may  stand  at 
the  head  of  the  next  page. 

Third   Step 

DIRECTIONS  FOR  POSTING 

posting  the  debit  items 

January  1.  (See  This  Entry  in  Your  Journal.) 
The  first  item  in  your  Journal  is  Cash  and  it  is  debited.  Turn  to  the  Cash 
account  in  your  Ledger  on  the  left  hand,  or  debit  side,  and  write  the  month  and  day 
(and  the  year  if  not  written  above)  in  the  date  columns.  Place  the  page  of  your 
Journal  in  the  folio  column,  and  write  the  amount  $2000  in  the  money  column.  (See 
Form  of  Ledger  on  page  j6.) 

We  have  now  posted  the  debit  item,  but  we  wish  to  show  in  the  Journal  that  it 
has  been  posted.  This  is  done  by  placing  the  Ledger  page  opposite  the  word  Cash 
in  the  Journal.     This  processes  called  post-marking. 

January  2.  (See  This  Entry  in  Your  Journal.) 
Mdse.  is  debited,  and  hence  turn  to  the  Merchandise  account  in  your  Ledger, 
and  on  the  debit  side  write  the  year,  month  and  day  in  the  date  columns,  and  place 
the  amount  $113.25  in  the  money  columns.  Next  post-mark  the  entries  by  placing 
the  page  of  the  Journal  from  which  the  item  is  posted  in  the  folio  column  in  the 
Ledger,  and  the  page  of  the  Ledger  in  the  folio  column  of  your  Journal,  opposite 
Mdse. 

January  3.     (See  This  Entry  in  Your  Journal.) 
Mdse.  is  debited  and  therefore  must  be  carried  to  the  debit  side  of  that  account 
in  the  Ledger.     Write  the  date  first,  consisting  of  the  month  (")  and  dav,  and  place 


34  MODERN    ACCOUNTANT 

the  amount  in  the  money  column.  Post-mark  the  entry  by  placing  the  page  of  the 
Journal  in  the  Ledger  and  the  page  of  the  Ledger  in  the  Journal  opposite  the  item 
posted. 

January  4.     (See  This  Entry  in  Your  Journal.) 

Cash  is  debited  in  your  Journal  and  hence  it  must  be  debited  in  your  Ledger. 
Turn  to  that  account  and  on  the  left  hand,  or  debit  side,  write  date,  placing  the 
amount  $20L25  in  the  money  columns.  Post-mark  the  entry  by  placing  the  page  of 
the  Journal  in  the  Ledger  and  the  page  of  the  Ledger  in  the  Journal  opposite  the 
item  posted. 

January  6.     (See  This  Entry  in  Your  Journal.) 

On  debit  side  of  Merchandise  account  write  the  date  and  $130,  and  post-mark 
the  entry  by  placing  the  Journal  page  in  the  folio  column  and  the  Ledger  page  in 
your  Journal. 

January  8.     (See  This  Entry  in  Your  Journal.) 

On  the. debit  side  of  James  Duncan,  Baltimore,  write  the  date  and  $191.50,  and 
post-mark  the  entry. 

January  9.     (See  This  Entry  in  Your  Journal.) 

On  the  debit  side  of  Cash  account  write  the  date  and  $100,  and  post-mark  the 
entry. 

January  10. 

On  the  debit  side  of  Merchandise  account  write  the  date  and  $202.50,  and  post- 
mark the  entry. 

January  13. 

On  the  dSbit  side  of  Bills  Payable  account  write  the  date  and  $526.25,  and  post- 
mark the  entry. 

January  15. 

On  the  debit  side  of  Expense  account  write  the  date  and  $50,  and  post-mark  the 
entry. 

January  16. 

On  the  debit  side  of  Merchandise  account  write  the  date  and  $291.40,  and  post- 
mark the  entry,  etc. 

posting  the  credit  items 

January  1.     (See  This  Entry  in  Your  Journal.) 

The  first  credit  item  in  your  Journal  is  your  name  and  it  is  credited.  Turn  to  your 
account  (the  first  account),  and  since  it  is  credited  in  the  Journal  we  must  make  the 
entry  upon  the  right-hand  or  credit  side  m  the  Ledger.  Write  first  the  month  and 
day  (with  the  year  written  above).  Place  the  amount  $2000  in  the  money  column. 
Now  post-mark  the  entries  by  placing  the  page  of  your  Journal  in  the  Ledger  in  the 
folio  column  and  the  page  of  your  Ledger  in  the  Journal  opposite  your  name. 


DIRECTIONS    FOR    POSTING  35 

January  2.     (See  This  Entry  in  Your  Journal.) 

The  credit  item  of  this  entry  is  Cash,  and  hence  turn  to  the  Cash  account  in  your 
Ledger;  on  the  credit  side  write  month  and  day  (using  repeating  marks  for  month), 
and  place  the  amount  in  the  money  column.  Now  post-mark  the  entry  by  placing 
the  page  of  the  Journal  in  your  Ledger  and  the  page  of  your  Ledger  in  the  Journal. 

January  3.     (See  This  Entry  in  Your  Journal.) 

Bills  Payable  is  credited  and  must  therefore  be  carried  to  the  credit  side  of  that 
account  in  the  Ledger  (see  top  of  page  2  in  your  Ledger ),  and  place  the  amount  $526.25 
in  the  money  column.  Post-mark  by  placing  the  page  of  the  Journal  in  the  Ledger 
and  the  page  of  the  Ledger  in  the  Journal  opposite  the  item  posted. 

January  4.     (See  This  Entry  in  Your  Journal.) 

Mdse.  is  credited  in  this  entry  and  hence  that  account  must  be  credited  in  the 
Ledger.  Turn  to  the  Merchandise  account  and  upon  the  credit  side  enter  the  date, 
placing  the  amount  in  the  money  column.  Post-mark  the  entry  by  placing  the 
page  of  your  Journal  in  the  Ledger  and  the  page  of  your  Ledger  in  the  Journal. 

January  6.     (See  This  Entry  in  Your  Journal.) 

On  the  credit  side  of  Cash  account  write  the  date  and  $130,  and  post-mark  the 
entry  as  heretofore. 

January  8.     (See  This  Entry  in  Your  Journal.) 

On  the  credit  side  of  Merchandise  account  write  the  date  and  $19L50,  and  post- 
mark the  entry. 

January  9.     (See  This  Entry  in  Your  Journal.) 

On  the  credit  side  of  James  Duncan's  account  write  the  date  and  $100,  and  post- 
mark the  entry. 

January  10. 

On  the  credit  side  of  Cash  account  write  the  date  and  $50,  and  post-mark  the 
entry.  On  the  credit  side  of  Bills  Payable  account  write  the  date  and  $152.50,  and 
post-mark  the  entry. 

January  13. 

On  the  credit  side  of  Merchandise  account  write  the  date  and  $162.50,  and  post- 
mark the  entry.  On  the  credit  side  of  Cash  account  write  the  date  and  $363.75,  and 
post-mark  the  entry. 

January  15. 
On  the  credit  side  of  Cash  account  write  the  date  and  $50,  and  post-mark  the 
entry. 

January  16. 
On  the  credit  side  of  Washburn  &  Co.  's  account  write  the  date   and  $280,  and 
post-mark  the  entry.     On  the  credit  side  of  Cash  account  write  the  date  and  $11.40, 
and  post-mark  the  entry,  etc. 


36 


MODERN    ACCOUNTANT 


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Fourth  Step 

TRIAL   BALANCE 

You  have  probablj-  noticed  that  in  posting,  for  every  amount  carried  to  the  debit 

side  of  an  account  you  carried  an  eqtial  amount  or  amounts  to  the  credit  side  of  some 

other  account  or   accounts.      This  is  an   illustration  of  the  principle  upon  which 


TRANSACTIONS 


37 


Double  Entry  is  founded,  and  from  which  it  derives  its  name,  viz.  :  That  every  debit 
must  have  a  corresponding  credit  (two  entries).  If,  therefore,  you  have  made  no 
error  in  posting,  the  debits  and  credits  in  your  Ledger  are  equal,  and  the  book  is 
said  to  be  in  balance.  To  ascertain  whether  this  is  so,  you  will  now  proceed  to  take 
off  a  Trial  Balance.  The  first  step  in  this  operation  will  be  to  foot  the  accounts.  This 
consists  in  adding  each  side  of  every  account  in  the  Ledger,  and  placing  the  total 
directly  beneath,  in  small  but  distinct  pencil  figures.  A  sharp,  hard  pencil  should 
be  used  for  this  purpose 

For  the  Trial  Balance  use  a  sheet  of  paper  ruled  in  Journal  form.  Write  the 
name  of  each  account  as  it  appears  in  your  Ledger  in  regular  order  and  place  the 
folio  of  the  Ledger  to  the  left  in  the  folio  column.  In  the  money  columns  place  op- 
posite its  name,  the  pencil  footings  of  both  sides  of  each  account  as  previously  obtained 
(unless  it  be  an  account  which  balances,  in  which  case  it  may  be  left  out  entirely). 


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When  all  of  the  accounts  with  the  totals  of  each  have  thus  been  transferred  upon 
this  sheet,  foot  up  the  two  columns,  and  if  the  totals  agree,  the  Ledger  is  in  balance 
and  is  probably  correct.  This  is  not  an  absolute  proof  of  the  correctness  of  the 
Ledger,  however,  as  an  entry  may  have  been  posted  to  a  wrong  account,  or  omitted 
entirely,  without  destroying  the  equilibrium  of  the  Ledger. 

If  the  Trial  Balance  shows  the  Ledger  to  be  out  of  balance,  the  error  must  be 
discovered  before  proceeding.  This  is  best  done  by  "checking"  the  books,  which 
consists  in  tracing  each  entry  from  the  Journal  to  its  account  in  the  Ledger,  and  if 
found  correct,  making  a  small  check  mark  (y)  opposite  the  amount.  After  com- 
pleting this  operation,  if  any  item  is  found  not  checked,  it  is  considered  as  superflu- 
ous or  wrong,  and  if,  after  comparison  with  the  Journal,  it  is  found  to  be  really  so, 
it  must  be  erased,  or  otherwise  corrected. 


38  MODERN    ACCOUNTANT 

The  Trial  Balance,  it  will  be  perceived,  is  a  complete  exhibit  of  the  Ledger 
prior  to  closing,  hence  in  business  it  should  always  be  dated  and  carefully  filed  away, 
or  kept  in  a  book  provided  for  that  purpose,  for  future  reference.  It  may  exhibit 
total  debits  and  total  credits,  or  only  the  debit  and  credit  balances. 

Until  otherwise  instructed,  yoii  will  include  both  debit  and  credit  totals  in  the 
Trial  Balance.  Do  not  include  in  the  Trial  Balance  any  account  that  balances,  that 
is,  the  total  debits  equaling  the  total  credits. 

EXERCISE   X 

FEBRUARY 

To  the  Student:  Journalize  the  following  transactions  and  write  up  business  papers 
and  have  them  approved,  after  which  the  Journal  entries  will  be  copied  in  the  per- 
manent Journal. 

TRANSACTIONS 

Feb.  1,  19 — .     (Student)  commenced  business  this  day  with  a  cash  capital  of  $3500. 

Feb.  2.  Bought  of  Marshall  Field  &  Co.,  50  doz.  Men's  Linen  Shirts  at  $10, 
$500;  100  doz.  Ladies'  Linen  Handkerchiefs  at  $2.50,- $250;  2  cases  Paper  Cambric, 
4000  yd.,  at  10^-,  $400;  200  yd.  Bleached  Cotton  at  10^',  $20.  Total  $1170.  Gave 
in  payment  my  note  at  9  days  for  $600;  cash  for  balance,  $570. 

Feb.  3.  Bought  of  J.  V.  Farwell  &  Co.,  on  account,  50  yd.  Irish  Linen  at  40^', 
$20;  100  yd.  Sheeting  at  11^-,  $11.     Total  $31. 

Feb.  4.  Sold  to  W.  O.  Thomas,  on  account,  10  doz.  Men's  Linen  Shirts  at  $12, 
$120;  5  yd.  Irish  Linen  at  50^,  $2.50.     Total  $122.50. 

Feb.  5.  Sold  to  Dodd  &  Brown,  St.  Louis,  on  their  note  at  30  days,  1  case 
Paper  Cambric,  2000  yd.  at  11^-,  $220;  10  doz.  Ladies'  Linen  Handkerchiefs  at  $3, 
$30.     Total  $250. 

Feb.  7.  Bought  of  H.  B.  Claflin  *&  Co.,  on  my  note  at  30  days,  1000  yd.  Ging- 
ham at  10^-,  $100;  55  yd.  Black  Silk  at  $2.75,  $151.25;  100  yd.  Broadcloth  at  $3.75, 
$375.     Total  $626.25. 

Feb.  9.  vSold  to  G.  B.  Fairchild,  Omaha,  on  account,  30  yd.  Black  Silk  at  $3, 
$90;  15  yd.  Irish  Linen  at  55^-,  $8.25.     Total  $98.25. 

Feb.  11.     Paid  Marshall  Field  &  Co.,  cash  for  my  note  of  the  2d  inst.,  $600. 

Feb.  12.  Sold  Henry  Russell,  Milwaukee,  Wis.,  on  account,  50  j'd.  Sheeting  at 
12^,  $6;  200  yd.  Gingham  at  12^',  $24;  10  doz.  Men's  Linen  vShirts  at  $12,  $120.  Total 
$150. 

Feb.  15.  Sold  to  C.  A.  Warren  for  cash,  14  yd.  Broadcloth  at  $4,  $56;  1  case 
Paper  Cambric,  2000  yd.  at  12^-,  $240.     Total  $296. 

Feb.  15.  Bought  of  J.  B.  Clark,  Store  and  Lot,  No.  185  Lake  Street,  for  $4000. 
Gave  in  payment,  cash,  $2000;  my  note  at  60  days  for  $2000.     Total  $4000; 

Feb.  16.  Received  cash  of  W.  O.  Thomas,  on  account,  $75;  also  $50  from 
Henry  Russell  on  account. 

Feb.  18.  Sold  G.  B.  Fairchild,  Omaha,  on  account,  100  yd.  Bleached  Cotton  at 
12^,  $12;  20  doz.  Men's  Linen  Shirts  at  $12.50,  $250.     Total  $262. 

Feb.  19.  Received  of  Henry  Russell,  Milwaukee,  his  note  at  30  days  in  full  of 
account,  $100. 


I.EDGER    HEADINGS  39 

Feb.  20.  Sold  to  F.  E.  Arnold,  on  account,  20  yd.  Irish  Linen  at  50^,  $10;  800 
yd.  Gingham  at  12^',  $96;  16  yd.  Broadcloth  at  $4,  $64.     Total  $170. 

Feb.  22.  Received  of  G.  B.  Fairchild,  on  account,  cash,  $125;  his  note  at  30 
days  for  $200.     Total  $325. 

Feb.  23.  Paid  taxes  on  Store  and  Lot,  No.  185  Lake  Street,  for  current  year,  in 
cash,  $18.30. 

Feb.  24.     Received  cash  of  W.  O.  Thomas,  on  account,  $25. 

Feb.  25.  Sold  to  Henry  Russell,  Milwaukee,  on  account,  50  yd.  Sheeting  at 
13^,  $6.50;  50  doz.  Ladies'  Linen  Handkerchiefs  at  $3,  $150.     Total  $156.50. 

Feb.  26.     Received  cash  of  F.  E.  Arnold,  on  his  account,  $100. 

Feb.  26.     Paid  PI.  B.  Claflin  &  Co.,  cash,  on  my  note  of  the  7th  inst.,  $450. 

Feb.  27.  Sold  to  W.  O.  Thomas,  on  account,  10  doz.  Men's  Linen  Shirts  at  $12, 
$120.  He  paid  on  account  cash,  $25.     (Two  entries.) 

Feb.  28.     Paid  cash  to  Robert  Law  for  2  tons  coal  for  use  of  store,  $13. 

Feb.  28.     Received  of  Dodd  &  Brown,  cash  on  their  note  of  the  5th   inst.,  $150. 

Feb.  28.  Received  cash  of  the  following  persons  on  account:  G.  B,  Fairchild, 
$20;  F.  E.  Arnold,  $40;  W.  O.  Thomas,  $50.     Total  $110. 

Feb.  28.  Paid  cash  for  the  following  expenses:  Clerk's  wages  to  date,  $60; 
Gas  bill  for  the  month,  $10.80;  Advertising  in  the  Times,  $12.     Total  $82.80. 

Business  Papers  required  for  February. 

Bill  to  Henry  Russell,  Milwaukee,  Wis.,  Feb.  12.      (See  page  26  for  form.) 
Receipt  to  W.  O.  Thomas,  Feb.  24.      (See  page  65  for  form.) 

EXERCISE   XI 

LEDGER  HEADINGS 

To  the  Student:     Open  the  following  accounts  in  the  Ledger. 

Always  have  a  heading  at  the  top  of  each  page,  giving  each  account  the  desig- 
nated number  of  lines.  If  there  is  not  sufficient  room  for  an  account  you  may  skip 
the  part  of  a  page  and  start  on  the  following  page.  On  page  24  you  will  find 
instructions  for  forwarding  accounts  to  new  pages. 

(Student),  8;  Merchandise,  15;  Real  Estate,  8;  Expense,  8;  Cash,  15;  Bills 
Receivable,  10;  Bills  Payable,  10;  J.  V.  Farwell  &  Co.,  Chicago,  8;  W.  O.  Thomas, 
8;  G.  B.  Fairchild,  Omaha,  8;  Henry  Russell,  Milwaukee,  Wis.,  8;  F.  E.  Arnold,  8; 
Loss  and  Gain,  8. 

EXERCISE   XII 

To  the  Student:  You  will  now  post  the  transactions  from  the  Journal  to  the 
Ledger.     Read  "Directions  for  Posting,"  page  33. 

First,  Post  all  debit  items,  being  careful  to  place  the  debit  items  under  the 
proper  heading. 

Second,  Post  all  credit  items,  observing  the  usual  caution. 

EXERCISE   XIII 

To  the  Stude?it:  Read  directions,  "How  to  Take  a  Trial  Balance, ' '  page  36.  Take 
Trial  Balance  for  February.     Your  Trial  Balance  must  agree  with  the  following: 


40 


MODERN    ACCOUNTANT 


L.  F. 


TRIAL.  BALANCE,  FEBRUARY  28,  19— 


Dr. 


Cr. 


1 

student, 

1 

Merchandise, 

**** 

** 

1 

Real  Estate, 

40** 

*» 

Expense, 

95 

80 

Cash, 

4456 

Bills  Receivable, 

550 

Bills  Payable, 

1050 

J.  V.  Farwell  Sc  Co. 

W.  O.  Thomas, 

*** 

** 

G.  B.  Fairchild, 

360 

25 

Henry  Russell, 

306 

60 

= 

F.  E.  Arnold, 

no 

130** 

*« 

3500 

1625 

25 

**** 

** 

150 

**** 

** 

31 

175 

*** 

*** 

140 

130**' 

»« 

No/c. — The  Trial  Balances  will  be  written  on  a  left-hand  page  of  the  Statement 
Book,  the  corresponding  right-hand  page  being  reserved  for  the  Statement  or  Bal- 
ance Sheet,  as  the  case  may  be. 

EXERCISE   XIV 

CLOSING  THE  LEDGER 


Having  become  familiar  with  the  rules  and  principles  of  Journalizing,  learned 
the  process  by  which  Journal  entries  are  transferred  to  the  Ledger,  called  posting, 
and  the  method  of  proving  the  correctness  of  the  work  by  means  of  the  Trial  Bal- 
ance, it  now  becomes  necessary  to  take  another  step  in  advance,  called  Closing  the 
Ledger. 

The  object  of  closing  the  Ledger  is  to  place  the  accounts  in  the  Ledger  in  such 
a  condition  as  to  show:  1st,  the  resources  and  liabilities  of  the  business;  2d,  the 
gains  and  losses  of  the  business,  and  3d,  the  net  capital  or  net  insolvency  of  the 
proprietor,  or,  if  a  partnership  concern,  the  financial  condition  of  each  partner.  It 
is  customary  in  business  to  close  books  once  a  year,  although  many  firms  close  their 
books  semi-annually. 

Before  attempting  the  process  of  closing  a  set  of  books  it  will  be  necessary  to 
understand  the  classification  of  accounts. 

Accounts  are  divided,  according  to  their  nature,  into  two  kinds:  Real  and  Repre- 
se?itative.  A  Real  Account  is  one  which  shows  a  resource  or  liability^  as  Cash^  which 
exhibits  the  amount  of  money  on  hand;  Personal  Accounts,  showing  what  individuals 
owe  the  business  and  what  the  business  owes  to  individuals,  on  open  account;  Bills 
Receivable  and  Bills  Payable,  showing  what  is  owing  to  the  business  and  what  the 
"business  owes  on  written  obligations,  etc.  Such  accounts  are  called  Real,  because 
they  represent  a  fixed  and  certain  value,  supposed  to  be  unchangeable. 

A  Representative  Accou7it  is  one  which  shows  the  separate  gains  or  losses  of  the 
business.  This  class  of  accounts  represents  the  earning  activities  of  the  business, 
and  under  this  head  we  place  Merchandise^  Real  Estate ^  Ba?ik  Stock,  Shipments,  or  Cofi- 
signments,  and  all  other  property  accounts,  also  Expense,  bitercst,  Discount,  Commission. 
etc.  These  accounts  are  called  Represe?itative  because  they  possess  a  fluctuating  or 
speculative  character,  and  their  values  are  changeable. 


CLOSING    REPRESENTATIVE    ACCOUNTS 


41 


The  classification  of  accounts  may  be  shown  thus : 


Real. 


Accounts. 


\  Those  which  represent  Resources  or  Liabilities,  as: 
(         Cash,  Bills  Rec,  Bills  Pay.,  Personal  Accounts. 


Tj  i.  1^-         j  Those  which  represent  Gains  or  Losses,  as: 

Kepresemative.    ^  Expense,  Interest,  Discount,  Mdse.  and  other  Property  Accounts. 


I.     Real  Ace oiints  are  closed  to  or  by  ''Bala?ice. " 

II.     RepreseJitative  Accou?its  are  closed  (after  entering  tne  Jnve?ttory,  if  any)  to  or  by  ''Loss 
atul  Gain." 

An  entry  in  red  ink  on  the  Ledger  indicates  that  the  amount  is  to  be  transferred 
either  to  some  other  account,  or  to  some  other  part  of  the  same  account.  It  also 
indicates  that  the  entry  is  first  made  in  the  Ledger,  and  not  transferred  from  the 
Journal  or  some  other  book.  In  transferring  red  ink  entries  they  always  change 
sides,  and  are  entered  on  the  opposite  sides  from  where  they  first  appear,  in  black 
ink.  In  being  transferred,  entries  change  sides  in  order  to  restore  the  amount  to  its 
original  position  as  a  debit  or  credit  on  the  Ledger. 

CLOSING   REPRESENTATIVE   ACCOUNTS 

Before  the  Representative  accounts  can  be  closed  an  inventory  must  be  made  of 
all  property  on  hand  or  unsold,  belonging  to  the  concern.  This  process  is  called  in 
business  "Taking  an  account  of  Stock,"  and  consists  in  examining  and  enumerating 
the  articles  and  affixing  values  thereto.  The  value  should  be  governed  by  what  it 
would  cost  to  replace  the  articles  in  store  at  the  time  of  taking  the  inventory. 
"Taking  account  of  Stock"  is  estimating  the  value  of  perhaps  the  most  important 
assets  of  the  business,  and  hence  is  a  matter  of  too  great  importance  to  be  intrusted 
to  inexperienced  persons.     Write  the  inventory  below  the  trial  balance. 

In  the  present  case  we  have  the  following 

INVENTORY  OF  PROPERTY  UNSOLD,  FEBRUARY  28,   19— 


40  doz.  Ladies'  Linen  Handkerchiefs, 
10  yd.   Irish  Linen, 
25     "     Black  Silk, 
70     "     Broadcloth, 
100     "     Bleached  Cotton, 

House  and  Lot,  185  Lake  St.,  valued  at 


@  $2.50 
@  .40 
@  2.75 
@  3.80 
@      .10 


100 
4 

68 
266 

10 


75 


448 
4000 


Having  secured  an  inventory  of  property  on  hand,  proceed  to  close  the  Repre- 
sentative accounts  as  follows: 

After  the  last  account  in  your  Ledger,  open  an  account  with  Loss  and  Gain,  if 
one  is  not  already  opened,  into  which  will  be  carried  all  the  gains  or  losses  of  the 
business  as  they  are  ascertained  from  the  Representative  accounts. 

The  first  Representative  account  is 

MERCHANDISE 

This  is  a  Representative  account  having  an  Inventory.  We  enter  the  Inventory 
upon  the  credit  side  as  if  the  goods  were  sold  at  the  valuation  given,  making  the 
entry  in  red  ink,  Feb.  28,  I^iventory,  $448.'/§.  Adding  this  to  our  total  sales  and  sub- 
tracting the   purchases  (debit  side)  we  have  a  difference  of  $246.75,  and  since  the 

3 


42 


MODERN    ACCOUNTANT 


credit  side  is  the  greater  this  difference  represents  a  gain.     We  enter  this  gain  upon 
the  smaller  side  (debit)  in  red  ink,  Feb.  28,  Loss  and  Gain,  $246.y^. 
Rule  and  foot  the  account  as  shown  below: 


^ 

^ 

/ 

//y£> 

M^ 

A^ 

/ 

/2-ZJ'df 

J 

/ 

J  / 

/ 

zj-^ 

7 

2r 

=>(^yi^  >'^*S^ei,^^<yi^ 

'  />  2.  7 

Z4^^ 
t.  0  7  t*- 

2^ 

Z..J- 

7A 

f 
/Z- 

- 

/ 
/ 

z- 
z 

2- 

Z-Cz 

O^y^T^z^-e^yz^Zir/^ 

^7 

zr 

C-^W-^^t5<?-e^^^^ 

Z- 

Z/P74A 

^d> 

Zdiy^ 

aa 

5^^ 

/ 

K' 

-^^/ 

y-' 

Since  both  of  the  red  ink  entries  in  the  above  account  have  thrown  the  Ledger 
out  of  balance,  we  must  proceed  to  make  the  necessary  entries  to  restore  it  to  bal- 
ance. Bring  down  the  red  ink  inventory  entry  upon  the  opposite  side  in  black  ink 
below  the  rulings,  Mar.  i,  hwoitory,  $448,j5.  Carry  the  Loss  and  Gain  entry 
to  the  credit  side  of  the  Loss  and  Gain  account,  making  the  entry  in  black  ink  Feb. 
28,  Mdsc,  $246.'/§.  Post-mark  the  entries  by  placing  the  page  of  the  Loss  and  Gain 
account  in  the  Merchandise  account,  and  the  page  of  the  Merchandise  account  in  the 
folio  column  of  the  Loss  and  Gain  account.  Whenever  a  balance  is  brought  down 
on  the  same  page  use  a  check  mark  in  the  folio  column. 

REAL   ESTATE 

This  is  a  Representative  account.  It  is  debited  for  the  cost  of  the  property,  and 
credited  for  the  sales.  It  is  closed  the  same  as  IMerchandise  account,  viz.  :  credit  the 
account  for  the  value  of  the  Lnventory,  after  which  close  into  Loss  and  Gain  for  the 
difference  between  the  two  sides.  Rule  and  foot.  Carry  the  Inve?ttory  below  the  rul- 
ings. Carry  the  Loss  and  Gain  entry  to  the  opposite  side  of  the  Loss  and  Gain  account 
to  Real  Estate  in  black  ink,  dating  the  entry  the  last  day  of  the  month. 

Where  there  is  but  one  item  on  each  side  of  an  account,  the  single  red  lines  may 
be  omitted  in  ruling.  No  footing  is  necessary.  The  double  red  lines  may  be  ruled 
on  the  blue  line  below  the  amounts,  where  they  would  be  placed  were  the  account 
ruled  and  footed  in  the  usual  manner. 


PROPRIETOR'S    ACCOUNT 


43 


EXPENSE 

Expense  account  is  used  to  record  the  running  expenses  of  the  business.  It  is 
debited  for  all  outlays  for  this  purpose,  and  credited  for  any  receipts  or  returns 
which  may  accrue  to  us  from  any  item  which  has  been  previously  charged  to 
Expense  account.  Thus  the  entire  rent  of  our  store  having  been  charged  to 
Expense,  if  we  sub-let  a  portion  of  the  store-room,  whereby  an  income  is  received, 
Expense  account  should  be  credited  for  this  income.  This  account  is  credited  by 
Inve7itory  for  everything  remaining  on  hand  at  the  time  of  closing  which  has  been 
previously  entered  in  the  Dr.  of  the  Expense  account.  For  example,  a  portion  of 
our  winter's  fuel  being  on  hand,  is  entered  as  an  inventory  on  the  credit  side 
of  Expense  account.  Likewise,  rent  or  salaries  past  due  and  unpaid  may  be  entered 
on  the  debit  side  of  Expense  account,  as  Inventory,  as  a  liability,  after  which  the 
account  is  closed  to  Loss  and  Gtrin. 

LOSS  AND  GAIN* 

This  account  is  the  receptacle  of  all  our  losses  and  gains.  Into  it  have  been 
closed  all  representative  accounts,  and  it  now  stands  debited  for  all  losses  of  the 
business  and  credited  for  all  gains.  Hence  the  difference  between  the  two  sides 
must  show  either  a  net  gain  or  a  net  loss.  If  the  Cr.  side  be  larger,  the  difference  is 
a  net  gain;  if  the  Dr.  side  be  larger,  the  difference  is  a  net  loss.  Since  the  proprietor 
of  the  business  is  the  one  who  is  to  receive  all  gains  or  bear  all  losses,  we  enter  the 
difference  between  the  two  sides  in  red  ink,  Feb.  28,  (Student)  $ij2.6^  on  the  Dr. 
side.  Rule  and  foot  the  account.  Transfer  the  net  gain  or  loss  to  the  opposite  side 
of  the  Proprietor's  account  in  black  ink,  Feb.  28,  Loss  and  Gain,  $ij2.6§. 

In  case  ther&^are  partners  instead  of  a  single  proprietor,  enter  each  partner's  portion  of  the 
net  gain  separately  in  the  Loss  and  Gain  account  and  transfer  the  same  to  each  partner's  account. 

*The  term  Loss  aftd  Cain  is  the  same  as  Profit  and  Loss.  Some  prefer  the  former  expression 
to  the  latter,  because  Loss  in  the  Ledger  title  stands  upon  the  left  or  debit  side  of  the  account, 
where  the  losses  are  entered,  and  Gam  upon  the  right  or  credit  side  of  the  account,  where  gains 
are  placed.     To  the  accomplished  bookkeeper  the  wording  of  the  title  is  of  very  little  consequence. 


^^^^^ 


Z4^^/^ 


^•^^7^ 


PROPRIETOH'S  ACCOUNT 


Is  the  first  account  upon  the  Ledger  and  the  last  to  be  closed.  It  is  credited  with  the 
capital  at  commencing,  and  for  any  investments  made  during  the  progress  of  the 
business.  It  is  debited  for  all  amounts  withdrawn  from  the  business.  At  closing 
this  account  is  debited  for  the  net  loss  or  credited  for  the  net  gain  as  brought  over 
from  the  Loss  and  Gain  account.     The  final  closing  entry  in  this  account  is  Balance. 


44 


MODERN    ACCOUNTANT 


If  entered  on  the  debit  side  it  shows  a  net  capital;  if  entered  on  the  credit  side  a  net 
insolvency  at  closing. 

The  Proprietor'a  account  in  this  set  will  stand  as  follows: 


^^^^^^Z^^^-^^-<?^ 


^.>^£^ 


2^ 


/t?3Z.<:^i«-^i> 


/^ 


3  C32-^S 


3<^JZ 


<^ 


^ 


2r 


'Tl^se^ 


A^ 


y^ 


/3z 


4^ 


JAAAs'L 


3<^3  Z(.<J- 


.<r 


Total  investment,  $3500.  Gain  added,  $132. 65.  Closed  Feb.  28,  Balance,  $3632  63, 
which  is  his  net  capital.  Rule  and  foot.  Bring  down  the  Balance  beneath  the 
rulings. 

CLOSING  REAL   ACCOUNTS 

Begin  with  the  first  Real  account  and  close  them  in  the  order  in  which  they 
appear  in  the  Ledger. 

The  first  Real  account  to  be  closed  is 

CASH 

The  debit  side  represents  our  receipts  and  the  credit  side  our  payments      Sub- 
tracting  the  credit  from  the  debit,  we  find  $721.90  as  the  amount  of  Cash  on  hand 
Enter  on  the  smaller  side,  which  is  the  credit,  this  difference  in   red"  ink,  Feb.  28,  By 
Balance,  $721. go.     Rule  and  foot  the  account  as  shown  below : 


^J?^£^ 


5^ 


'  t=225Z-2^«-?^-^l<i/ 


/ 
/ 

z 
z 
z 
z 
z 
z 


i^ 


3\S-^C7 

/zs- 

/Z3- 

/^^ 
/3~CP 


A^'^ATi^ 


yz-z-y 


Z- 

// 
.23 

zr 

ZA 


/O^JZ-i^^-^-Z-C^-^ 


/ 

/ 
/ 

z 
z 
z 
z 


<^CPCP 

^3lP 
^3 
J^Z, 


Z2^ 


4^^^3^1'tP 


This  red  ink  entry  upon  the  credit  side  of  the   Ledger  has  thrown  it  out  of 
balance,  and   to  restore  it  again   to  its  proper  condition   we  must  enter  the  same 


STATEMENT  45 

amount  upon  the  debit  side.     We  therefore  "bring  the  Balance  down  under  the 
ruling"  upon   the   debit   side  in  black  ink,  and  as  this  is  the  amount  with  which  we 
begin  the  next  month's  business  we  date  the  entry  March  1,  thus:  Mar.  /,  Balance, 
$'j2i.go.      In  the  folio  columns  of  both  of  these  entries  place  a  check  mark. 
The  next  account  is 

BILLS  RECEIVABLE 

This  is  a  Real  account,  and  hence  will  be  closed  precisely  like  Cash.  The  debit 
side  shows  the  amount  of  other  persons*  notes  and  acceptances  received  by  us,  and 
the  credit  side  shows  the  amount  of  such  notes  and  acceptances  disposed  of.  The 
difference  must  be  the  amount  of  Bills  Receivable  on  hand. 

Close  on  credit  side  in  red  ink  Feb.  28,  Balance.  Rule  up  and  foot.  Bring  the 
balance  down  in  black  ink  upon  the  debit  side. 

BILLS  PAYABLE 

This  is  a  Real  account.  It  is  credited  with  our  notes  and  acceptances  issued  and 
debited  as  they  are  redeemed.  It  follows  that  the  difference  between  the  two  sides 
must  represent  the  amount  of  such  obligations  outstanding,  and  t;,he  difference,  if 
any,  must,  in  closing,  be  entered  upon  the  debit  side.  Close  to  Balaiice.  Rule  up 
and  foot.     Bring  the  balance  down  upon  credit  side  in  black  inki 

J.  V.  FAIIV7ELL  &   CO. 

The  debit  side  of  a  Personal  account  shows  what  the  individual  owes  the  firm 
and  the  credit  side  shows  what  the  firm  owes  him.  The  balance,  then,  is  always  a 
debt  due  the  firm  or  a  debt  owing  by  the  firm,  viz. :  a  resource  or  liability.  If  the 
Dr.  side  exceeds  the  Cr. ,  the  difference  shows  a  resource,  and  conversely,  if  the  Cr. 
side  exceeds  the  Dr.,  the  difference  shows  a  liability.  It  is  closed  to  Balance.  (Close 
all  personal  accounts  in  tliis  uiaimer.) 

STATEMENT 

Having  closed  the  books,  it  now  becomes  necessary  to  make  an  exhibit  of  the 
condition  6i  the  business.  This  is  called  a  Statement  and  should  show  in  a  compact 
form  the  resources  and  liabilities  of  the  business;  the  gains  and  losses  with  the 
sources  from  which  they  are  derived,  and  the  net  capital  or  net  insolvency  of  the 
proprietor  or  partners  of  the  business.  The  facts  from  which  this  Statement  is  made 
are  gathered  from  the  Ledger,  and  consist  of:  1.  All  balances  brought  down. 
2.  The  Loss  and  Gain  account.  3.  The  proprietor's  account.  Debit  balances  are 
resources,  and  credit  balances  are  liabilities.  The  difference  between  the  resources 
and  liabilities  shows  the  net  capital  or  net  insolvency  of  the  proprietor  or  firm,  which 
must  agree  with  the  proprietor's  account,  in  the  Ledger,  and  also  with  the  last 
result  in  the  Statement. 

After  completing  your  Statement,  present  all  of  your  books  and  papers  to  the 
teacher  for  approval. 


46 


MODERN    ACCOUNTANT 


— j^S^^Zi'^^^.^-^z^^^^Z^^^^/^  . 


(yL.£^^i^'gM>tyt-C-.^-<^ 


Z- 


Ou^c^UU^ 


,.y^Z^t-c^^-^A^  )^  (3-^ 


^^. 


A^<f^J- 


f^ 


3  / 


Z4^C/. 


fsr6 


3jnp6> 

/3Z 


■jrr3^f£. 


ZJ 


J^JZ 


Z-A^^yj^ 


/JZ 


tis 


J^SZ^S 


PRACTICE    IN    RULING 
PRACTICE  IN  RULING- 


47 


K 


EAT  and  accurate  ruling  is  essential  to  a  well-kept  set  of 
books,  and  especially  is  this  important  in  the  Ledger.  To 
be  able  to  draw  light,  uniform  lines,  beginning  and  end- 
ing at  precisely  the  proper  points,  requires  much  practice. 
Place  the  ruler  as  shown  in  the  drawing  with  the  bevel 
side  down,  hold  the  pen  at  right  angles  with  the  ruler,  and  draw  a  steady  line  with 
very  slight  shading. 

The  student  should  rule  one  or  more  sheets  similar  to  the  following  and  present 
them  to  the  teacher  for  inspection  and  approval. 


/^ 

1 

'         /                  / 

48  MODERN    ACCOUNTANT 

EXERCISE   XV 

To  the  Student:  Write  up  the  Journal  for  the  following  transactions  and  have  it 
approved : 

TRANSACTIONS 

March  1,  19 — .  Robert  Clark  commenced  business  this  day  with  a  cash  capital  of 
$4500. 

March  1.  Bought  of  Sprague,  Warner  &  Co.,  for  cash,  500  lb  Butter  at  27^, 
$135;  150  fi)  Maple  Sugar  at  15^s  $22.50;  75  &  Black  Tea  at  40^-,  $30;  50  Bb  Java 
Cofffee  at  18^,  $9;  800  doz.  Eggs  at  15^,  $120.     Total  $316.50. 

March  2.  Bought  of  A.  M.  Trimmer,  on  my  note  at  20  days,  100  bbl.  Winter 
Wheat  Flour  at  $5.50,  $550;  UO  bbl.  Apples  at  $1.75,  $215;  300  bu.  Peach  Blow 
Potatoes  at  60^,  $180.     Total  $975. 

March  4.  Sold  C.  E.  Rogers,  Cincinnati,  Ohio,  on  account,  100  H)  Butter  at  30^, 
$30;  25  bbl.  Winter  Wheat  Flour  at  $6,  $150;  40  bbl.  Apples  at  $2,  $80.     Total  $260. 

March  6.  Bought  of  J.  G.  Cross,  Aurora,  on  account,  100  boxes  California 
Grapes  at  $3.75,  $375;  20  boxes  Lemons  at  $9,  $180;  8  bu.  Cranberries  at  $3.25,  $26. 
Total  $581. 

March  8.  Sold  to  E.  D.  Graham,  Baltimore,  on  account,  40  Bb  Maple  Sugar  at 
20^,  $8;  30  S)  Black  Tea  at  50^.  $15;  200  doz.  Eggs  at  18^,  $36;  50  bbl.  Winter 
Wheat  Flour  at  $6,  $300.     Total  $359. 

March  9.     Paid  J.  G.  Cross  cash  on  account,  $200. 

March  10.  Sold  to  Geo.  W.  Hamilton,  Detroit,  Mich.,  on  account,  300  &  Butter 
at  30^',  $90;  50  Bb  Java  Coffee  at  22^-,  $11;  100  bu.  Peach  Blow  Potatoes  at  75^,  $75. 
Total  $176. 

March  13.     Paid  A.  M.  Trimmer,  cash,  on  my  note  of  the  2d  inst.,  $600. 

March  14.  Received  from  C.  E.  Rogers  his  note  at  20  days  for  $160,  to  apply  on 
account. 

March  16.  Bought  of  J.  C.  Warren,  Burlington,  Iowa,  on  account,  10  bags  Wil- 
mington Peanuts,  1500  lb,  at  5^',  $75;  5  bbl.  White  Fish  at  $8,  $40;  50  boxes  Herring 
at  25^,  $12.50;  20  Bb  Cloves  at  40^,  $8;  40  Bb  Pepper  at  20^,  $8.  Total  $143.50.  Paid 
cash  for  freight  on  same,  $9.75. 

March  18.  Received  of  C.  E.  Rogers,  on  account,  his  check,  which  I  have 
remitted  to  J.  G.  Cross  to  apply  on  my  account.     Face  of  check,  $75. 

March  19.  Sold  to  E.  D.  Graham,  Baltimore,  on  account,  100  lb  Butter  at  30^', 
$30;  45  lb  Black  Tea  at  50c,  $22.50;  400  doz.  Eggs  at  17^s  $68;  25  bbl.  Winter  Wheat 
Flour  at  $6.25,  $156.25.     Total  $276.75. 

March  19.  Sold  to  A.  D.  Bower,  Milwaukee,  25  boxes  California  Grapes  at 
$3.75,  $93.75;  20  boxes  Lemons  at  $9,  $180.  Total  $273.75.  Paid  freight  and  dray- 
age  on  same,  $7.25. 

March  20.     Received  from  E.  D.  Graham  his  note  for  $150,  to  apply  on  account. 

March  21.  Sold  to  C.  E.  Rogers,  Cincinnati,  Ohio,  on  account,  100  bu.  Peach 
Blow  Potatoes  at  75^,  $75;  5  bu.  Cranberries  at  $3. 50,  $17.50;  10  bags  Wilmington 
Peanuts,  1500  tb,  at  Qxp,  $90.     Total  $182.50. 

March  22.  C.  E.  Rogers'  note  of  the  14th  inst.  is  due  today.  He  remits  his 
check.     Face  of  note,  $160. 


TRANSACTIONS  49 

March  22.  Paid  cash  in  full  for  my  note  of  the  2d  inst.,  favor  of  A.  M.  Trim- 
mer.     Balance  due  on  note,  $375. 

March  2G.  Sold  to  Geo.  M.  Reynolds,  St.  Louis,  Mo.,  on  account,  100  bu.  Peach 
Blow  Potatoes  at  SO^-,  $80;  100  bbl.  Apples  at  $2,  $200.     Total  $280. 

March  26.     Received  cash  of  E.  D.  Graham,  Baltimore,  on  account,  $100. 

March  27.     Paid  cash  for  clerk  hire  to  date,  $75. 

March  27.  Received  from  Geo.  M.  Reynolds,  to  apply  on  account,  his  note  for 
30  days,  payable  at  Union  National  Bank,  for  $100,  and  his  check  on  Union  National 
Bank  for  $100. 

March  28.  Bought  of  Robert  Law,  for  cash,  5  tons  of  Coal  at  $6.25,  $31.25,  for 
use  in  store. 

March  30.  Received  of  A.  D.  Bower,  Milwaukee,  bank  draft  for  $200,  to  apply 
on  his  account. 

March  31.  Sold  to  C.  E.  Rogers,  Cincinnati,  Ohio,  on  account,  200  doz.  Eggs 
at  16^,  $32 ;  75  boxes  California  Grapes  at  $4,  $300.     Total  $332. 

Business  Papers  required  for  March : 

Invoice  of  Sprague,  Warner  &  Co. ,  March  1,  properly  receipted. 
C.  E.  Rogers'  check,  March  18.     (See  form  on  page  68.) 
Geo.  M.  Reynolds'  Note  of  March  27. 

EXERCISE   XVI 

To  the  Student:     Open  the  following  Ledger  accounts. 

Always  have  a  heading  at  the  top  of  the  page,  and  give  not  less  than  the  desig- 
nated number  of  lines  to  each  account.  Addresses  of  personal  accounts  should  be 
written  in  the  headings,  as  illustrated  on  page  23. 

Robert  Clark,  Proprietor,  8;  Merchandise,  14;  Expense,  8;  Cash,  14;  Bills 
Receivable,  8;  Bills  Payable,  8;  J.  C.  Warren,  Burlington,  Iowa,  8;  C.  E.  Rogers, 
Cincinnati,  Ohio,  8;  J.  G.  Cross,  Aurora,  111.,  8;  G.  W.  Hamilton,  Detroit,  Mich.,  8; 
E.  D.  Graham,  Baltimore,  8;  A.  D.  Bower,  Milwaukee,  8;  George  M.  Reynolds,  St. 
Louis,  8;  Loss  and  Gain,  8. 

EXERCISE  XVII 

To  the  Student:  Post  the  Journal  entries  to  the  Ledger  accounts  as  given  for 
March.  First  post  all  debit  items,  then  post  all  credit  items.  See  posting  direc- 
tions on  page  33. 

EXERCISE   XVIII 

To  the  Student:     1.     Take  a  trial  balance  as  per  instructions  on  page  36. 
2.      Test  your  trial  balance  with  the  following  results: 

Cash  on  hand $3445.25 

Bills  Receivable  on  hand 250.00 

8.     Have  trial  balance  approved.  \ 


50 


MODERN    ACCOUNTANT 


INVENTORY  OF  PROPERTY  UNSOLD,  MARCH  31,   19- 


110  lb  Maple  Sugar, 

@  $0.15 

16 

50 

3  bu.  Cranberries, 

@     3.25 

9 

75 

5  bbl.  Wbite  Fish, 

@     8.00 

40 

00 

50  boxes  Herring, 

@       .25 

12 

50 

20  R)  Cloves, 

@       .40 

8 

00 

40  lb  Pepper, 

@       .20 

8 

00 

94 

75 

4  tons  Coal, 

@     6.25 

25 

00 

EXERCISE  XIX 

To  the  Student:     Read  instructions  for  closing  the  Ledger  on  page  40. 

Observe  following  steps  in  finishing  March: 

First,  Credit  Merchandise  account,  Mar.  ji,  Inventory,  $g^.j^;  credit  Expense 
account,  Mar.  ji,  Inventory,  $25. 

Second,  Close  the  following  accounts  to  Loss  and  Gain  account:  Merchandise  and 
Expense. 

Third,  Close  Loss  and  Gain  account  to  the  Proprietor's  account.  First  test  the 
account.  When  the  Proprietor's  account  is  closed,  it  should  show  a  Balance  of 
$4627.75  If  correct,  transfer  the  loss  and  gain  difference  to  the  credit  of  the  Propri- 
etor's account.  As  you  close  Merchandise  and  Expense  accounts  and  transfer  the 
loss  and  gain  item  to  Loss  and  Gain  account,  rule  up  the  accounts  and  bring  down 
on  the  debit  side  the  "Inventory."  Now  close  the  following  accounts  to  Balance 
and  bring  down  the  Balances:  Cash,  Bills  Receivable,  Bills  Payable,  and  all  accounts 
with  persons. 

Fourth,  Take  a  trial  balance  of  the  Balances  brought  down.  These  Balances 
constitute  your  resources  and  liabilities,  and  they  must  balance. 

Fifth,  Make  out  a  Statement  as  per  form  on  page  46. 

JOURNALIZING— Continued 
EXERCISE   XX 

DRAFTS   AND    BILLS   OF   EXCHANGE 

A  Draft  is  a  written  order  or  request  drawn  by  one  person  upon  another, 
requesting  that  person  to  pay  a  specified  sum  of  money  to  a  third  person.  This 
paper  or  instrument  is  also  known  as  an  Order,  a  Bill  of  Exchange,  and  sometimes 
simply  as  Exchange. 

Bills  of  Exchange  are,  in  effect,  drafts.  The  name  is  usually  applied  to  drafts  in 
which  the  party  drawn  upon  resides  in  a  foreign  state  or  country. 

The  original  Parties  to  a  draft  are  the  Drawer,  Drawee  and  Payee. 

The  Drawer  of  a  draft  is  the  person  who  signs  it  and  thus  requests  the  payment 
of  the  money. 

In  the  draft  given  on  the  opposite  page  A.  B.  Saunders  &  Co.  is  the  drawer. 

The  Drawee  is  the  person  on  whom  the  draft  is  drawn,  or  who  is  to  pay  the  sum 
of  money  specified. 

In  the  draft  given  on  the  opposite  page  Wolf  Bros,  is  the  drawee. 

The  Payee  is  the  person  to  whom  the  money  is  made  payable  by  the  draft. 

In  the  draft  given  on  the  opposite  page  J.  A.  Stephens  is  the  payee. 


BOOKKEEPING    PROBLEMS  51 

The  Theory  of  a  Draft  is  that  the  drawee  has  funds  in  his  possession  belonging 
to  the  drawer,  or  is  owing  the  drawer.  Drafts  are  sometimes  drawn  where  there  is 
no  indebtedness,  but  simply  an  agreement  between  the  parties. 

A  Sight  Draft  is  one  which  is  payable  "at  sight"  or  upon  presentation. 

A  Time  Draft  is  one  which  is  payable  a  specified  time  "after  date,"  or  after  sight. 

Time  drafts  have  days  of  grace  when  promissory  notes  have  them. 

Acceptance.     When  a  time  draft  is  presented  to  the  drawee,  he  signifies  his  will- 
ingness to  pay  it  at  maturity  by  "accepting"  it.     This  is  done  by  writing  the  word 
^''Accepted,''  with  the  name  and  date  across  the  face  of  the  draft,  usually  in  red  ink 
The   paper  is   thereafter   called   an    '' Acccptattce^'"   and    becomes   the   same   as   the 
acceptor's  promissory  note. 

To  Honor  a  draft  is  to  pay  it  if  a  sight  draft,  or  accept  it  if  a  time  draft. 


$-j^.  Chicago,  III.,  Aug.  /,  ig — 

Ai  ten  days  after  sight .A, ^^ pay  to 

J.  A.  Stephens a  rO*^^  •    •••«••  ^-  •  •  •  f. ^'^  order 

Seventy-five  and  j^ .-..  .r. . .  •/♦  |t,Sf  ••  •  •  •  •♦  c^X Dollars 

Value  received  and  charge  to  the  accvunt  0)^0  -^ 

To  Wolf  Bros.,  A.  B.  Saunders  &=  Co. 

Springfield,  Mass, 


The  above  is  a  time  draft  drawn  by  A.  B.  Saunders  &  Co.  on  Wolf  Bros,  in  favor 
of  J.  A.  Stephens. 

The  theory  of  this  draft  is  that  Wolf  Bros,  have  funds  in  their  possession  belong- 
ing to  A.  B.  Saunders  &  Co.,  and  that  the  latter  desire  to  transfer  this  fund  or  part 
of  it  to  J.  A.  Stephens. 

If  this  were  to  be  accomplished  without  the  use  of  the  draft,  Saunders  &  Co. 
would  direct  Wolf  Bros,  to  send  them  the  money;  upon  receipt  of  the  same  Saunders 
&  Co.  would  send  the  money  to  Stephens.  It  will  be  seen  that  with  the  aid  of  the 
draft  time  is  saved  and  the  risk  is  lessened. 

BOOKKEEPING  PROBLEMS 

1.  Givc7i: — 1.  A  owes  you  $300,  and  he  pays  you  $100  on  account.  What  will 
you  credit? 

2.  As  above,  but  A  pays  $100  to  B  for  you.     What  will  you  credit.-' 

3.  As  above,  but  you  write  a  letter  to  A  asking  him  to  pay  C  $100.  What  will 
you  credit? 

4.  As  above,  but  you  draw  a  draft  on  A  for  $100  and  send  it  to  D.  What  will 
you  credit? 

5.  As  above,  but  5'ou  draw  a  draft  on  A  for  $100  and  sell  the  draft  to  the  bank 
for  cash.     What  will  you  credit? 

II.  Giveti: — 1.  B  owes  you  $500.  He  sends  you  his  check  for  $100  to  apply  on 
account.     What  do  you  debit? 

2-  As  above,  but  he  sends  you  75  bu.  of  wheat  at  75^-  per  bu.  What  will  you 
debit? 


52 


MODERN    ACCOUNTANT 


3.  As  above,  but  he  sends  you  his  note  for  $100  to  apply  on  account.     What  will 
you  debit? 

4.  As  above,  but  he  sends  you  his  draft  on  E  for  $100  to  apply  on  account.     What 
will  you  debit? 

5.  As  above,  but  he  sends  you  his  draft  at  10  days  for  $100  on  F  to  apply  on 
account.     What  will  you  debit? 

III.     Given: — 1.      You  ozve  C  $300.     How  does  his  account  stand  on  your  books? 

2.  As  above.     You  send  him  cash  to  apply  on  account.     What  do  you  debit? 

3.  As  above.     You  send  him  Mdse.  to  apply  on  account.     What  do  you  debit? 

4.  As  above.     You   send   him  your  note   to  apply  on    account.     What  do  you 
debit? 

5.  As  above.     You  tell  him  to  call  on  G   who  will  give  him  $100.      What    will 
you  debit? 

6.  As  above.     C  sends  H  to  you  for  money  and  you  give  him  $100.     What  will 
you  debit? 

7.  As  above.     C  draws  on  you  at  10  days  and  gives  draft  to  H  who  collects  from 
you  when  due.     What  do  you  debit? 

8.  As  above.     C  draws  on  you  at  sight  and  sells  the  draft  to  the   bank.     When 
you  pay  the  draft,  what  will  you  debit? 

FORM  OF  TIME  DRAFT  AND  ACCEPTANCE 


i-^'g-gT^^^^-Z^i^-^^-Z^ 


In  Snowden's  Journal: 

In  the  above  draft  Snowden  will  receive  value,  say  Mdse.,  when  he  issues  the 
draft.      He  will  therefore  make  the  following  entry: 


Aug. 


Mdse. 


500 


J.  W.  Hunter, 


500 


TRANSACTIONS 


53 


In  Anderson's  Journal: 

Anderson  receives  the  draft  from   Hunter,  say  on  account.     He  will  make  the 
following  entry: 


Aug. 


Bills  Rec, 


M.  Snowden, 


500 


500 


In  Hunter's  Journal: 

Snowden  has  asked  Hunter  to  pay  to  Anderson  the  amount  called  for.     He 
accepts  the  draft  and  enters  it  as  follows: 


Aug. 


M.  Snowden, 


Bills  Pay., 


500 


500 


Test  the  above  entries  by  the  following  rules. 

From  the  foregoing  explanations  we  have  the  three  following  rules  covering 
drafts  and  acceptances. 

To  the  Shidoit:     Journalize  the  following  transactions  on  Journal  paper. 

DRAWER'S  RULE 

Rule  VII.  —  Whe?iever  you  draw  a  bill  of  exchange,  draft  or  order  on  a  person,  credit  that 
person.     Debit  zvhatyoii  receive  as  in  other  cases. 

May  1,  19 — .     Sold  Henry  Spencer  for  cash,  my  draft  on  J.  W.  Hunter  for  $500. 
Cash  is  Dr.  because  we  received  it.     J.  W.  Hunter  is  Cr.  because  he  produced  value  to  us. 

May  2.  Bought  of  F.  E.  Warner,  100  pc.  Merrimac  Prints  at  $3,  $300.  Gave  in 
payment  my  draft  on  J.  Berry. 

May  3.  Received  cash  of  J.  Andrews  for  my  draft  on  A.  Hosmer  at  10  days' 
sight  for  $300. 

May  4.     Sold  Henry  Simmons  on  his  note,  my  draft  on  W.  F.  Parsons  for   $450. 

Bills  Rec,  Dr. 

May  5.  Paid  my  note  for  $500,  favor  of  S.  Bogardus,  by  giving  sight  draft  on 
Geo.  W.  Myers. 

PAYEE  OR  INDORSEE'S   RULE 

Rule  Vlll.  —  Whenever  yon  receive  or  purchase  a  draft  or  order  drawn  on   another  person, 
debit  Bills  Receivable;  and  wJie7i  you  dispose  of  it  credit  Bills  Receivable. 

May  6.     Bought  of  John  Simpson  for  cash,  his  draft  on  Louis  Knight  for   $300. 

May  8.  Bought  of  S.  Whitney  his  draft  on  Frank  Jones  for  $800.  Gave  in 
payment  my  note  for  $500;  cash  for  balance,  $300. 

May  9.  Sold  to  S.  M.  Wicker,  my  draft  on  D.  Thornton  for  $265.  Received  in 
payment  cash,  $120;  his  note  for  balance,  $145. 

May  10.     Bought  of  W.  B.  Hoswell,  for  cash,  his  order  on  Hiram   Pointer,  $200. 

May  12.  Bought  of  S.  Whitney,  his  draft  on  Frank  Jones  for  $500.  Gave  in 
payment  my  note  for  $500. 


54  MODERN    ACCOUNTANT 

May  12.  Bought  of  Charles  Warren,  30  bbl.  Flour  at  $6,  $180;  10  bbl.  Pork  at 
$10,  $100.  Total  $280.  Gave  in  payment  W.  B.  Hoswell's  order  on  Hiram  Pointer 
for  $200;  cash  for  balance,  $80. 

DRAWEE'S  KT7L.E 

Rule  IX.  —  ]Vhc?tcver  a  person  drazus  a  bill  of  exchange  or  draft  o?i  you  which  you  honor, 
debit  tJiat  person.  W/tenez'eryou  accept  a  bill  of  exchange  or  draft  Cr.  Bills 
Payable,  a?id  ivheti  you  pay  your  accepta?ice  Dr.  Bills  Payable.  Accepting  a 
draft  is  the  safne  i?i  effect  as  giving  your  note. 

May  13.  James  Williams  has  drawn  on  me  at  10  days  for  $300.  I  have  accepted 
the  draft. 

May  14.  Bought  of  H.  Thomas  on  my  acceptance  at  30  days,  30  pc.  Broadcloth, 
720  yd.,  at  $2,  $1440;  35  pc.  Merrimac  Prints,  1400  yd.,  at  10^-,  $140.     Total  $1580. 

May  16.    "Sold  James  Goodman  on  his  acceptance  at  30  days,  10  pc.  Broadcloth,  ■ 
200  yd.,  at  $3,  $600;  20  pc.  Merrimac  Prints,  800  yd.,  at  15^,  $120.     Total  $720. 

May  17.  Sold  for  cash,  James  Goodman's  acceptance  of  the  16th  inst.  for 
$720. 

May  18.  Accepted  L.  A.  Arnold's  draft  on  me  at  5  days'  sight,  favor  of  Henry 
Walker,  for  $500. 

May  18.  Sold  J.  W.  Woodbury,  20  bbl.  Flour  at  $6,  $120;  10  bbl.  Pork  at  $8.50, 
$85 ;  50  bbl.  Salt  at  $2,  $100.  Total  $305.  Received  in  payment  his  draft  at  sight 
on  A.  A.  Blair  for  $150;  cash  $50;  balance  on  account,  $105. 

May  19.  Paid  cash  for  James  Williams'  draft  on  me,  favor  of  J.  W.  Webster, 
accepted  on  the  13th  inst.,  for  $300. 

May  20.  Sold  Henry  Spencer  on  his  note,  300  bu.  Corn  at  40^,  $120;  100  bu. 
Wheat  at  $1.50,  $150.     Total  $270. 

May  20.  We  owe  L.  H.  Ames  $200  on  account.  He  has  drawn  on  us  at  30 
days'  sight,  favor  of  L.  J.  Gage,  for  this  amount,  and  we  have  accepted  the  draft. 

May  21.  Sold  C.  Lock,  100  bbl.  Flour  at  $9,  $900.  Received  in  payment  his 
draft,  dated  May  18,  at  10  days'  sight  on  J.  Good,  accepted  by  Good  on  May  20,  for 
$500;  cash  for  balance,  $400. 

May  21.  Bought  of  John  Davis  &  Co.,  200  bu.  Corn  at  35^^  $70;  500  bu.  Oats  at 
25^,  $125 ;  600  bu.  Wheat  at  50^',  $300.  Total  $495.  Gave  in  payment  our  draft  on 
sight  on  C.  D.  Holmes  for  $100;  cash  $100.  Accepted  their  draft  on  us  at  30  days' 
sight,  favor  J.  Dean,  for  the  balance,  $295. 

May  24.  Received  of  L.  J.  Gage  on  account,  the  draft  which  we  accepted  on 
the  20th,  his  favor,  for  $200. 

May  25.  Bought  on  my  note  at  30  days,  300  bu»  Corn  at  40^-,  $120;  80  bu. 
Wheat  at  $1.40,  $112;  200  bbl.  Salt  at  $1.50,  $300.     Total  $532. 

May  26.     Sold  Henry  Clark  on  his  acceptance,  100  bu.  Corn  at  50^,  $50. 

May  27.  Bought  on  my  acceptance  at  30  days.  House  and  Lot  on  Michigan 
Avenue  for  $3500. 


ACCOUNT    WITH    INTEREST  55 


No.  I.  ChicagOy  May  2S,  ig— 

At  ten  days  sight  pay  to  the  order  of 

A.  C.  Armstrong S^oo 

Five  Hundred. Dollars^ 

and  charge  to  account  of 

To  J.  N.  Roe.,  fohn  Davis  &=  Co. 

New  York. 


May  28.  Make  John  Davis  &  Co. 's  entry  for  the  above  draft,  supposing  that 
they  gave  it  to  A.  C.  Armstrong  on  account. 

May  29.     Make  A.  C.  Armstrong's  entry  when  he  receives  it. 

May  29.  A.  C.  Armstrong  presents  the  draft  to  J.  N.  Roe  and  has  it  accepted. 
Make  Roe's  entry. 

May  30.  A.  C.  Armstrong  now  delivers  the  draft  to  Claflin  &  Co.  on  account. 
Make  Armstrong's  entry. 

May  30.     What  entry  will  Claflin  &  Co.  make? 

May  30.  At  maturity  the  draft  is  presented  and  paid  in  cash.  Make  J.  N. 
Roe's  entry. 

May  31.     What  entry  will  Claflin  &  Co.  now  make? 

Write  the  acceptance  and  draft  of  May  21,  inserting  your  own  name  at  the 
proper  place. 

EXERCISE   XXI 
ACCOUNT   WITH  INTEREST 

Interest  is  the  use  of  money,  or  the  measure  of  the  net  profit  on  capital. 

The  student  must  not  get  the  idea  that  he  receives  or  pays  interest,  but  receives 
or  pays  y^r  interest  or  for  the  use  of  money. 

To  the  Student:  Write  up  the  following  examples:  Head  one  account  W.  Lyman, 
one  George  Mason,  one  Mdse.,  and  one  Cash.  After  which  enter  the  following  exer- 
cise in  all  the  accounts  involved,  both  debit  and  credit: 

Example  1. — June  6,  19 — ,  Bought  a  bill  of  goods  amounting  to  $367.22  from  Geo.  Mason,  on 
account.  June  7,  Sold  a  bill  of  goods  to  W.  Lyman  on  account,  amounting  to  $461.79.  June  8,  Sold 
a  bill  of  goods  amounting  to  $308.10  for  cash.  June  9,  Paid  Geo.  Mason  $100  cash  on  account. 
June  10,  Received  $167,50  cash  on  account  from  W.  Lyman.  June  11,  Bought  of  W.  Lyman  on 
account  a  bill  of  goods  amounting  to  $216.30.  June  12,  Sold  a  bill  of  goods  for  cash,  $68.35.  June 
13,  Bought  for  cash  merchandise,  $150.  June  14,  Sold  Geo.  Mason,  on  account  a  bill  of  goods 
amounting  to  $508.04.     June  15,  Geo.  Mason  has  paid  us  $200  on  account. 

The  cash  balance  is  $***.95,  Geo.  Mason  owes  us  $**.82,  W.  Lyman  owes  us 
$**.99.  All  the  merchandise  being  sold,  the  gain  is  $***.76.  Enter  the  balances  in 
red  ink  and  properly  close  the  accounts. 


56 


MODERN    ACCOUNTANT 


EXERCISE  ON  INTEREST 

In  this  exercise  use  for  a  heading  "Interest,"  as  below;  after  which  enter  the 
following  interest  items  as  either  debit  or  credit: 

Dr.  interest  Cr. 


19- 

19- 

June 

1 
3 

Cost, 

24 

*** 

** 

June 

2 

Produced,    • 

12 

50 

Example  2.— June  1,  19—,  Paid  cash  for  interest  due  on  my  note,  $24.  (Dr.  Interest.)  June  2, 
Received  cash  for  interest  due  on  Smith's  note,  my  favor,  $12.50.  June  3,  Paid  Jones  &  Co.  cash  for 
interest  due  on  my  note,  $141.63.  June  5,  Paid  cash  for  interest  on  mortgage  on  my  store,  $243. 
June  6,  Jones  &  Bros.'  note,  my  favor,  for  $900,  has  interest  due  amounting  to  $54,  received  cash  for 
the  interest.  (Cr.  Interest  $54.)  June  7,  I  owe  Smith  &  Co.  $750,  and  to  settle  this  give  them  my 
note  for  $790,  charging  the  difference  to  interest  account.  June  10,  A.  B.  Jones  owes  me  $900,  and 
to  pay  this  gives  me  a  note  secured  by  J.  A.  Lyons  for  $1000,  the  difference  being  allowed  as  in- 
terest. June  15,  O.  E.  Grant  paid  his  note  of  $600  and  interest,  $25.  June  17,  Paid  my  note  of  4th 
ult.,  amounting  to  $700  and  interest  due  on  same,  $36.24. 

The  loss  or  gain  on  interest  is  $***.37. 

The  rule  for  debiting  and  crediting  discount,  premium,  expense,  etc.,  is  the 
same  as  for  interest. 

QUESTIONS 

1.  Why  do  we  debit  interest? 

2.  Why  do  we  credit  interest? 

3.  What  is  the  cost  of  interest  in  the  above  example? 

4.  What  did  the  interest  account  produce? 

5.  What  is  the  gain  and  how  found? 

EXERCISE   XXII 

JOURNALIZING  INTEREST 
Rule  X. — Debit  interest  zvhen  it  costs  you. 
Rule  XI. — Credit  interest  zohen  it  produces  you. 

To  the  Student:  Journalize  the  following  transactions  on  Journal  papei",  and 
have  your  work  approved : 

June  1,  19 — .     Paid  cash  for  the  annual  interest  on  my  note,  $29. 
Interest  is  debited. 

June  2.     Received  cash  for  interest  on  J.  W.  Strong's  note,  $8.50. 
June  3.     Bought  of    S.  Bogardus  on   my  note  at  30  days,  240  bu.  Potatoes  at 
30^,  $72. 
June  4. 
June  5. 


Sold  James  Humes  on  his  note  at  60  days,  250  bu.  Corn  at  40^,  $100. 
Received  cash  of  J.  Southard  for  his  note  and  interest  thereon  to  date. 
Face  of  note,  $1000;  interest,  $10.50.     Total  $1010.50. 

June  6.      Paid  cash  for  interest  on  my  note  at  10  days,   favor   of  James  Berry, 
$16.30. 

June  9.     Paid  R.  Warren  cash  for  my  acceptance,  $500;  interest    on    the  same, 
$12.     Total  $512. 


ACCOUNT    WITH    PREMIUM    AND    DISCOUNT 


57 


June  10.  Sold  Geo.  Jones,  Merchandise  amounting-  to  $500.  Received  in  pay- 
ment my  note  which  I  gave  Wm.  Harrison,  $300;  interest  due  and  allowed  on  the 
same,  $10;  balance  in  cash,  $190. 

June  11.  The  note  given  May  9  is  now  due  in  favor  of  J.  Mershon.  Face  of 
note,  $400;  interest,  $3.75.  Total  $403.75.  I  have  paid  for  same  with  new  note 
for  full  amount,  $403.75. 

June  12.  Bought  of  J.  Walters,  bill  of  goods  for  $2000.  Paid  him  for  the  same 
his  note  at  3  months  for  $1000;  interest  due  on  the  same  to  date,  $50;  my  note  at 
30  days  for  $450;  cash  for  balance,  $500. 

June  13.  J.  Denuey's  note  of  the  3d  is  now  due.  Face  of  note,  $700;  interest 
on  the  same  to  date,  $2.50.  Total  $702.50.  Received  for  same  new  note  at  30  days, 
$702.50. 

June  17.  Paid  my  note,  favor  of  J.  Gould,  for  $800;  interest  due  and  allowed 
on  same,  $60.  Gave  in  payment  James  Berry's  note  for  $600;  interest  on  above 
note,  $20;    cash  for  balance,  $240. 

June  21.  Paid  cash  for  my  acceptance  with  interest.  Face  of  acceptance, 
$500 ;  interest,  $20.     Total  $520. 

Write  the  note  of  June  4,  interest  6%,  payable  at  First  National  Bank. 

EXERCISE   XXIII 

ACCOUNTS  "WITH   PREMIUM   AND   DISCOUNT 

Premium  is  a  sum  paid  for  the  value  of  commercial  paper,  usually  drafts,  above 

their  face. 

Discount  is  a  sum  allowed  or  deducted  from  the  face  value  of  commercial  paper. 

Thus,  when  drafts  upon  any  city  or  country  are  in  unusual  demand  by  reason  of  a  general 
movement  of  crops  or  goods  in  a  certain  direction,  drafts  upon  such  city  or  country  will  sell  at  a 
premium.     And  when  the  reverse  conditions  prevail,  drafts  may  be  bought  at  a  discount. 

Premium  and  Discount  may  also  be  called  species  of  interest,  in  which  premium  is 
a  sum  paid  in  addition  to  the  principal  or  debt;  and  discount  is  an  allowance 
deducted  from  the  principal  for  the  payment  before  it  is  due. 

Example  1. — July  1,  19—,  Paid  for  premium  on  draft  at  bank,  $3.40.  July  2,  Bought  bank 
draft  for  $1000,  paying  a  premium  of  $1.75.  July  3,  A.  B.  Jones  sent  us  a  draft  at  a  premium  of  $3. 
July  5,  Sent  draft  bought  on  2d  inst.  to  J.  W.  White  at  a  premium  of  $2.40. 

Trace  above  items  through  the  following  account: 

PREMIUM 


19— 

July 


Cost. 


3 
1 
3 

40 

75 

19- 

July 

5 
5 

Produced, 
Loss  &  Gain, 

2 
5 

40 
75 

8 

15 

8 

15 

In  the  following  example  open  an  account  with  Premium  and  one  with  Discount. 

Example  2. — July  2,  19—,  Paid  for  premium  on  bank  draft,  $1.65.  July  3,  John  Doe  sent  me 
draft  on  account  at  a  premium  of  $3.25.  July  5,  Bought  bank  draft  at  a  discount  of  $1.75.  July  6, 
Sent  bank  draft  purchased  on  2d  inst.  to  Richard  Roe  on  account  at  a  premium  of  $1,95.  July  7, 
Sent  bank  draft  purchased  on  5th  inst.  to  A.  Brown  at  a  premium  of  $1.25.     July  9,  Received  on 


58  MODERN    ACCOUNTANT 

account  from  J.  P.  Frye  a  bank  draft  at  a  premium  of  $1.85.  July  12,  Received  on  account  from 
F.  D.  Meacham  a  bank  draft  at  a  discount  of  $5.40.  July  15,  Bought  bank  draft  for  $1000  at  a  dis- 
count of  $1.50,  and  sent  it  to  H.  A.  Court  at  a  premium  of  $1.25. 

Date  the  closing  of  these  accounts  July  25,  and  have  them  approved. 

EXERCISE  XXIV 

JOURNALIZING  PREMIUM  AND   DISCOUNT 

To  the  Student:     Journalize  transactions  for  July  and  have  the  same  approved. 

Rule  XII.  —  When  yo2i  pay  more  for  a  draft  or  7iote  than  its  face,  Dr.  Premium  for  the 
excess.  WJien  you  receive  more  for  a  draft  or  note,  Cr.  Premium  for  the 
excess. 

Rule  XIII.  —  Whe?iyou  pay  less  for  a  draft  or  note  than  its  face,  Cr.  Discount  for  the  de- 
ficiency.     When  you  receive  less  for  a  draft  or  note  than  its  face,  Dr.  Discount. 

Note. — Review  carefully  the  rules  for  drafts  given  in  Exercise  XX.  Do  not  fail 
to  apply  the  following:  Always  debit  the  person  who  draws  on  you;  always  credit 
the  person  on  whom  you  draw. 

July  1,  19—.  Bought  of  D.  S.  Dow,  Mdse.  amounting  to  $1500.  Accepted  his 
draft  on  me  at  60  days  for  same,  $1500. 

See  second  clause  of  Rule  IX. 

July  2.  Bought  of  R.  Brooks  &  Co.  for  cash,  bank  draft  on  New  York  at  1/10% 
premium.     Face  of  draft,  $1000;  premium,  $1.00.     Total  $1001. 

See  Rule  XII.     A  bank  draft  is  considered  as  cash. 

•July  3.     Sold  for  cash  to  J.   R.   Penn,  my  draft  on  L.    Johnson,   Cleveland,  at 
J^%  premium.     Face  of  draft,  $400;  premium  at  >^%,  $0.50.     Total  $400.50. 

See  Rules  VII  and  XII. 

July  3.  Have  this  day  drawn  on  J.  W.  Webster  at  10  days,  and  discounted  the 
same  at  Union  Bank.  Face  of  draft,  $1000;  cash  received,  $998.33;  discount  off, 
$1.67. 

July  5.  Bought  of  S.  D.  Thompson,  merchandise  amounting  to  $8000.  Paid 
him  for  same,  my  draft  on  R.  Martin  at  )4^  %  discount.  Face  of  draft,  $1000;  discount 
on  same,  his  favor,  $2.50;  the  balance  I  owe  him  on  account,  $7002.50. 

Discount  Dr.     R.  Martin  Cr.  $1000. 

July  6.  Bought  of  D.  Swansey  &  Co.  for  cash,  bank  draft  on  New  York  at  1/10% 
premium,  which  I  have  remitted  to  S.  D.  Thompson  on  account.  Face  of  draft, 
$2500;  premium  at  1/10%,  $2.50.     Total  $2502.50. 

Premium  Dr. 

July  8.  Drew  draft  at  sight  on  S.  Shaw  for  $2000,  and  sent  draft  to  S.  D. 
Thompson  on  account  at  a  premium  of  $2. 

Cr.  S.  Shaw  $2000. 

July  9.  Bought  of  Commercial  Bank  for  cash,  their  sight  draft  on  New  York  at 
^%  premium,  and  remitted  same  to  S.  D.  Thompson  on  account.  Face  of  draft, 
$2000 ;  premium  at  ^  % ,  $7. 50.     Total  $2007. 50. 


TRANSACTIONS  59 

July  11.  Bought  of  R.  Brown,  an  invoice  of  Mdse.  amounting  to  $4000.  Paid 
him  for  same  with  my  draft  on  James  Walters,  Boston,  at  \i^lo  discount.  Face  of 
bill,  $3000;  discount  oiT,  $7.50;  cash  for  balance,  $1007.50. 

Dr.  Mdse,  because  received;  Dr.  Discount,  because  we  "threw  off"  the  sum,  hence  a  loss:  Cr. 
James  Walters,  because  we  drew  on  him,  asked  him  to  pay  for  us;  Cr.  Cash,  because  paid  out. 

July  12.  I  have  this  day  taken  up  my  acceptance,  favor  of  D.  S.  Dow,  dated 
Istinst.,  at  60  days.  Face  of  draft,  $1500.  Paid  in  cash,  $1485;  discount  off  at 
1%,$15. 

July  13.  Exchanged  notes  with  R.  Davis,  for  our  mutual  accommodation,  each 
drawn  at  30  days,  for  $500.  I  have  discounted  his  note  at  Traders'  National  Bank, 
discount  off,  $5.00;  net  proceeds  received  in  cash,  $495.00. 

This  may  be  made  in  one  or  two  entries: 

Bills  Rec $500 

Bills  Bay $500 

Cash $495.00 

Discount 5.00 

Bills  Rec 500 

Since  Bills  Receivable  is  both  debited  and  credited  in  the  same  transaction,  it 
may  be  cancelled,  and  the  entry  would  appear  as  follows: 

Cash $495.00 

Discount 5.00 

Bills  Bay $500 

The  two-entry  plan  is  to  be  preferred. 

July  14.  Received  of  Martin  &  Co.,  New  York,  their  note  in  full  for  balance 
due  on  account  at  90  days,  dated  June  25,  which  I  have  discounted  in  Commercial 
Bank  at  6%.  Face  of  note,  $2000.  Received  cash,  $1976.33.  Discount  off 
$23.67. 

Martin  &  Co.,  Cr. 

July  15.  Sold  Johnson  &  Co.  Mdse.  amounting  to  $900.  Received  in  payment 
their  draft  at  sight  on  Fuller  &  Co.,  Detroit,  for  $450;  their  note  at  10  days  for  $450. 
Total  $900. 

July  16.     Paid  Wm.  Henderson  on  account^  the  following  draft  at  1%  discount: 


$2^0.  {City  and  State)  July  16,  ig— 

At  sixty  days  sight pay  to 

IVm.  Henderson or  order 

Two  Hundred  Fifty Dollars 

Value  received  and  charge  to  account  of 

To  S.  M.  Moore,  Student. 

Cincinnati,  O. 


Explanation. — First,  you  paid  some  one  on  account;  debit  that  person.  Second, 
you  drew  on  some  one;  credit  that  person.  Third,  did  discount  cost  or  produce 
value?  We  passed  the  draft  out  at  a  discount;  we  must  have  lost.  Then  it  should 
be  debited. 

Write  the  draft  and  note  of  July  15;  interest  on  note  5%,  payable  at  their  office. 


60 


MODERN    ACCOUNTANT 


EXERCISE   XXV 

ACCOUNTS  WITH  SHIPMENTS  AND   CONSIGNMENTS 

Shipment  is  a  term  applied  to  goods  shipped  away  for  sale  on  commission. 

Merchants  frequent!}'  find  a  portion  of  their  stock  unsalable.  Perhaps  they  have  over-pur- 
chased, or  the  goods  are  going  out  of  season,  or  have  become  damaged  or  "shop-worn."  In  order 
to  dispose  of  such  stock  and  make  room  for  new  goods,  they  are  sent  to  a  commission  merchant  in 
any  locality  where  the  market  for  such  goods  may  be  favorable,  to  be  sold  on  commission. 

Consignment  is  a  name  given  to  goods  received  to  be  sold  on  commission. 
Thus  the  shipper  of  the  goods  calls  them  a  shipment,  while  the  receiver  of  the 
goods,  who  is  usually  a  commission  merchant,  calls  them  a  consignmc7it. 
The  Consignor  is  the  shipper. 
The  Consignee  is  the  person  or  firm  to  whom  the  goods  are  shipped. 

Goods  received  for  sale  on  commission  are  said  to  be  consigned. 

Goods  shipped  away  for  sale  on  commission  still  remain  the  property  of  the 
shipper,  and  hence  we  can  not  debit  the  consignee  for  their  value.  Thus  a  shipment 
differs  from  a  sale.  "For  account  and  risk"  of  the  consignor,  signifies  that  the 
goods  are  still  his  property. 

An  Account  Sales  of  a  shipment  is  a  statement  rendered  by  the  consignee  to  the 
consignor,  showing  the  amount  of  sales,  charges  and  net  proceeds. 

The  Net  Proceeds  is  the  balance  after  all  charges  have  been  deducted  from  the 
total  sales. 

A  Shipment  on  Joint  Account  isvvhere  the  commission  merchant  agrees  to  share 
the  profits  or  losses  on  the  shipment  with  the  consignor. 

The  object  of  this  arrangement  is  to  stimulate  the  consignee  to  greater  care  and 
vigilance  in  effecting  sales.     However,  such  shipments  are  rare  in  business. 

To  distinguish  different  shipments  the  name  and  address  of  the  person  to  whom 
shipped  is  generally  used. 


SHIPMENTS 

Aug.  1,  19—,  Shipped  to  C.  H.  Hunter,  Burlington,  Iowa,  to  be  sold  on  my  account  and  risk, 
100  bu.  Peaches  at  75^,  $75;  paid  freight  on  shipment,  $8.75.  Aug.  10,  C.  H.  Hunter  reports  a  par- 
tial sale,  and  sends  us  $50  on  account.  Aug.  15,  C.  H.  Hunter  reports  that  he  has  sold  the 
remainder  of  the  shipment,  and  that  after  taking  out  for  insurance,  drayage  and  commission,  the 
balance  due  us  is  $53.75,  which  he  remits  in  a  bank  draft. 


Trace  entries  through  following  Ledger  form: 

SHIPMENT  TO  C.  H.  HUNTER 


Burling'ton,  la. 


19- 

19— 

Aug. 

1 

Cost, 

83 

75 

Aug. 

10 
15 

Produced, 

50 
53 


QUESTIONS 


1.  What  did  the  shipment  cost? 

2.  What  did  the  shipment  produce? 


3.  What  is  the  gain? 

4.  Why  do  we  ship  goods  as  in  this  case? 


SHIPMENTS    AND    CONSIGNMENTS 


61 


EXERCISE   XXVI 

JOURNALIZING  SHIPMENTS  AND   CONSIGNMENTS 
To  the  Student:     Read  over  the  introductory  matter  and   journalize  the  transac- 
tions for  August  and  have  them  approved. 

RUXES  FOB  SHIPMENTS 

Rule  XIV.  —  When  you  ship  goods  aivay  to  be  sold  on  commission,  debit  ^'Shipment  to 

Person's  Name  and  Address*'  for  the  cost  of  Mdse.  and  charges,  a)ui  Cr. 

ivJiat you  dispose  of,  as  in  other  cases. 

Special  attention  is  called  to  the  fact  that  in  the  above  rule  Shipment,  etc.,  is 

debited  for  not  only  the  cost  of  the  Mdse.,  but  also  for  the  charges,  which  usually 

consist  of  freight,   cartage,   insurance,    etc.     The  object  is  to  ascertain  what  the 

entire  shipment  has  cost  us,  and  hence  all  such  charges  must  be  added  to  the  value 

of  the  Mdse.  to  find  the  amount  for  which  the  Shipment  should  be  debited. 

Rule  XV.  —  When  the  Shipment  is  sohi  a?td  the  seller  or  C07isig?iee  sends  you  an  Account  Sales, 
Dr.  tuJiat  you  receive  and  Cr.  "Shipment  to  Person's  Name  and  Address" 

for  the  net  proceeds. 

In  shipments  on  joint  account  debit  the  Consignee  for  one-half  (or  other  portion) 
of  the  goods,  debit  SJiipmeid,  etc.,  for  the  remainder  and  credit  what  is  disposed  of. 

Aug.  1,  19 — .  Shipped  to  R.  Williams,  Milwaukee,  to  be  sold  on  my  account  and 
risk,  400  bbl.  Flour  at  $5,  $2000. 

According  to  Rule  XIV.  this  entry  will  appear  as  follows: 


Aug. 


Shipt.  to  R.  Williams,  Milwaukee, 
To  Mdse., 


2000 


2000 


Aug.  2.  Shipped  per  steamer  Lora,  and  consigned  to  Scott  &  Co.,  Buffalo,  to 
be  sold  on  my  account  and  risk,  2500  bu.  Wheat  at  80^,  $2000;  600  bu.  Corn  at  40^, 
$240.     Total  $224£). 

Aug.  3.  Shipped  per  C.  B.  &  Q.  R.  R.  to  A.  S.  Davis,  Aurora,  to  be  sold  on 
my  account  and  risk,  100  bbl.  Pork  at  $8. 

Aug.  8.  Received  of  R.  Williams,  Milwaukee,  an  Account  Sales  of  200  bbl. 
Flour,  shipped  him  the  1st  inst.     Net  proceeds,  which  he  owes  me  on  account,  $1245- 

See  Rule  XV. 

Aug.  9.  Shipped  to  J.  B.  McClure,  Cleveland,  O. ,  to  be  sold  on  joint  account, 
each  one  half,  1000  &  Dairy  Cheese  at  15^;,  $150;  80  firkins  Creamery  Butter,  4101b, 
at  20^',  $88.     Total  $238. 


Ti^W."  Shipment  J.  B.  McClure,  Cleveland"  iox  one  half,  and  debit"/.  B.  McClure'"  for  the 
remaining  half. 

Aug.  10.  Shipped  per  I.  C.  R.  R.  and  consigned  to  Hill  &  Wood,  New  Orleans, 
for  sale  on  my  account  and  risk,  200  bbl.  Minnesota  Flour  at  $6,  $1200;  paid  cash  for 
freight  and  drayage  on  same  in  advance,  $45.     Total  $1245. 

Aug.  13.     Shipped  per  steamer  Detroit,  and  consigned  to  J.   Lawrence  &  Co., 

Boston,  to  be  sold  on  my  account  and  risk,  120  bbl.  Flour  at  $5,  $600;  also  sold  them 

on  their  order,  100  bbl.  Flour  at  $5,  $500.     Total  $1100. 

When  you  ship  goods  per  another  man's  order,  debit  him.  Shipment  of  goods  in  response  to 
an  order  is  a  sale.     Two  debits  and  one  credit. 


62 


MODERN    ACCOUNTANT 


Aug,  14.     Received  a  telegram  that  the  unsold  remainder  of  our  shipment  to 

Milwaukee  was  destroyed  by  fire  in  the  warehouse  of  R.  Williams.     The   Flour  was 

insured  in  the  Home  Insurance  Co.  to  the  amount  of  $800. 

Since  our  loss  will  exceed  the  above  amount,  we  shall  hold  the  Insurance  Co.  for  the  face  of 
the  policy. 

Aug.  16.  Shipped  by  R.  R.  to  H.  Windsor,  Sfr  Paul,  to  be  sold  on  my  account, 
150  bbl.  Flour  from  store,  at  $5,  $750;  also  per  his  order,  100  tierces  Beef  at  $12; 
$1200. 

Aug.  17.  Discounted  at  bank  our  sight  draft  on  R.  Williams  at  1%.  Face  of 
draft,  $1245.     Discount,  $12.45.      Cash  received,  $1232.55. 

Aug.  23.  Received  of  H.  Windsor,  St.  Paul,  an  account  sales  of  150  bbl.  Flour, 
shipped  on  the  16th  inst.  Net  proceeds,  $825.  Received  in  full  for  same,  invoice  of 
Coffee,  $825 ;  paid  cash  for  freight,  $54.     Total  $879. 

Debit  Mdse.  for  the  freight. 

Aug.  25.  Received  cash  of  Home  Insurance  Co.,  in  settlement  of  loss  on  Flour 
shipped  to  R.  Williams  on  the  1st  inst.,  $800. 

Aug.  26.     Received  in  the  morning's  mail  the  following  account  sales: 

Omaha,  Neb.,  Aug.  25,  19 — 
Account  Sales  of  Butter  and  Cheese. 

Sold  for  Account  of  Student. 

James  Sexton,  Commission  Merchant. 


19— 
Aug. 

21 
23 
25 

21 
25 

20  tubs  Butter, 
300  bx.  Cheese, 
10  tubs  Butter, 

Freight,  16.25, 
Commission  5^, 

Net  Proceeds. 
E.  &  O.  E. 

charges. 
Cartage,  3.00, 

2020  K).,  18^, 

11940  R).,    9^, 

1010  R).,  m, 

363 

1074 

202 

60 
60 

1640 
101 

Aug. 

19 

82 

25 
01 

20 

26 

■^ 

1538 

94 

RULES  FOR  CONSIGNMENTS 

Rule    XVI.  —  ]]' hen  property  is  received  for  sale  on  couvnissioti,  make  the  person's  con- 
signment Dr.  for  the  charges  paid  if  any,  Debit  it  for  subsequent  charges,  and 
finally  for  the  net  proceeds. 
Rule  XVII. — Credit  the  person's  consignment  for  all  sales  of  property  belonging  to  it. 

Aug.  26.     Received  of  John  F.  King,  Los  Angeles,  Cal.,  50  boxes  Oranges,  for 
sale  on  his  account  and  risk.      Paid  freight  on  same  in  cash,  $12. 
According  to  Rule  XVI  the  above  entry  will  appear  as  follows: 


Aug. 


26 


John  F.  King's  CoDsignment, 


Cash, 


12 


12 


Aug.  28.     Sold  for  cash,  50  boxes  Oranges  belonging  to  John  F.  King's  Consign- 
ment at  $3.50,  $175. 


SHIPMENTS    AND    CONSIGNMENTS 


63 


According  to  Rule  XVII  we  credit  John  F.  King's  Consignment.     Were  we  to  credit  Mdse.  U 
would  indicate  that  we  had  sold  our  own  goods.     The  entry  will  stand  as  follows: 


Aug. 


28 


Cash, 


John  F.  King's  Consignment, 


17^ 


175 


Aug.  28.     Our  commission  at  5%  on  the  sale  of  50  boxes  Oranges  is  $8.75. 

Under  Rule  XVI  we  debit  John  F.  King's  Consignment  for  this  as  for  other  charges,  and  we 
credit  Commission  because  it  produced  value. 

Aug.  28.  Rendered  John  F.  King  an  account  sales  of  his  50  boxes  Oranges, 
Net  proceeds  we  have  remitted  in  cash,  $154.25. 

Debit  John  F.  King's  Consignment. 

Write  the  account  sales  for  the  above  transaction. 

EXERCISE   XXVII 

ACCOUNT  WITH  EXPENSE   AND   A  REVIEW 

Expense  is  a  name  given  to  all  amounts  expended  for  the  purpose  of  carrying  on 
the  business. 

Profit  and  Loss  includes  all  items  of  direct  or  immediate  loss  to  the  business, 
such  as  goods  stolen  or  destroyed  by  fire,  etc. 

Example  1. — A  merchant  paid  the  following  amounts  for  the  purpose  of  carrying  on  his  busi» 
ness.  Sept.  1,  19—,  Paid  rent  for  month,  $75.  Sept.  3,  Paid  for  blank  books,  $15,75.  Sept.  7,  Paid 
clerk  hire  for  week,  $16.50.  Sept.  8,  Paid  taxes  on  store  building,  $24.75.  Sept.  11,  Paid  premium 
for  insurance  on  goods,  $25.  Sept.  15,  Paid  for  5  tons  of  coal,  @  $5  per  ton,  $25.  Sept.  24,  Paid 
clerk  hire  to  date,  $36.75.     Sept.  30,  Sold  2  tons  of  coal  bought  at  cost  price. 

Complete  Example  1  and  write  up  the  following  one  and  have  them  approved. 

EXPENSE 


19— 
Sept. 


1 

3 

7 

8 

11 

15 

24 


75 
15 
16 

** 

75 

50 

** 

19— 

Sept. 

30 
30 

** 

** 

** 

** 

218 

75 

Loss  &  Gain, 


10 


218 


75 


Example  2.— Sept.  1,  19—,  Paid  for  rent  of  store  for  month,  $125.  Sept.  2,  Paid  for  calcimi- 
ning  store  room,  $23.60.  Sept.  5,  Paid  for  10  tons  coal  @  $7,  $70.  Sept.  10,  Paid  gas  bill  for  month, 
$1^.16.  Sept.  12,  Paid  for  postage  stamps,  $10.  Sept.  15,  Paid  advertising  bill,  $15.30.  Sept.  16, 
Sold  postage  stamps  for  $4.50.  Sept.  20,  Paid  clerk  hire  to  date,  $60.40.  Sept.  24,  Sold  4  tons  coal 
at  cost.     Find  the  loss  on  Expense  account,  there  being  supplies  on  hand  valued  at  $40. 

Write  Ledger  headings  for  the  following:  Cash,  10  lines;  Mdse.,  10  lines;  Ex- 
pense,   6  lines;  Bills  Rec,  6  lines;  Bills  Pay.,  6  lines,  and  Interest,  6  lines. 

Example  3.— Sept.  1,  19—,  Borrowed  at  bank  $750,  for  which  I  gave  my  note  at  10  days  with 
interest.     Sept.  2,  Paid  cash  for  books  and  stationery  for  use  in  business,  $36.50  (Dr.  Expense). 


64 


MODERN    ACCOUNTANT 


Sept.  3,  Bought  of  Lyons  &  Co.  bill  of  goods  amounting  to  $1260.75,  for  which  I  gave  my  note  with 
interest.  Sept.  4,  Paid  cash  for  freight  on  Mdse.,  $42,63.  Sept.  5,  Sold  A.  B.  Jones  bill  of  goods 
amounting  to  $321.10,  for  which  he  gave  us  his  note  with  interest.  Sept.  7,  Sold  O.  E.  Grant  bill  of 
goods  for  cash,  $124.36.  Sept.  10,  Paid  cash  to  apply  on  my  note  of  1st  inst.,  $250.  Sept.  11,  Paid 
cash  for  advertising,  $21.50  (Exp.).  Sept.  12,  Sold  bill  of  goods  for  interest-bearing  note,  $321,  Sept. 
20,  Paid  cash  for  balance  of  note  given  1st  inst.,  face  $500,  interest  on  the  same  $7.50.  Sept.  21,  Bought 
bill  of  goods  amounting  to  $426,  for  which  I  gave  my  note.  Sept.  22,  Sold  bill  of  Mdse.  amounting 
to  $975.50,  receiving  cash  $700  and  a  note  for  $275.50.  Sept.  23,  Collected  cash  of  A.  B.  Jones  for 
his  note  and  interest,  face  of  note  $;521.10,  and  interest  on  same,  $3.24.  Sept.  24,  Paid  cash  for  my 
note  and  interest,  face  of  note,  $1260.75,  interest  on  the  same,  $18.26.  Sept.  25,  Sold  balance  of 
Mdse.  on  hand  for  cash,  $827.65. 


You  are  now  ready  to  close  these  accounts, 
see  if  you  omitted  anything,  by  making  out  a 


Before  doing  so  test  your  work  to 


TRIAL  BALANCE 


Dr. 


Ck. 


19— 
Sept. 


30 


Cash, 
Mdse., 
Expense, 
Bills  Rec 
Bills  Pay 
Interest, 


5* 

*** 

**** 

** 


74** 


35 

*8 

60 

75 
7* 


84 


*** 
24** 


74** 


14 
*1 

«* 
*» 
*4 


84 


If  the  debit  and  credit  columns  have  equal  footings,  your  work  is  probably  cor- 
rect. You  may  now  close  the  accounts.  Close  "Cash,"  "Bills  Pay."  and  "Bills 
Rec."  by  writing,  in  red  ink,  the  date,  "Balance,"  and  the  difference  between  the 
two  sides  on  the  smaller  side.  Rule  up  these  accounts  and  bring  down  the  balance. 
Close  "Mdse.,"  "Expense"  and  "Interest"  by  using  the  words  "Loss  and  Gain" 
instead  of  the  word  "Balance."  Rule  up  these  accounts,  but  do  not  bring  down  the 
difference. 

QUESTIONS 

1.  Why  does  a  trial  balance  balance? 

2.  Will  the  balances  brought  down  on  the  debit  side  e(]ual  the  balances  brought  down 
on  the  credit  side?    Why? 

EXERCISE   XXVIII 

JOURNALIZING  EXPENSE   AND   PROFIT  AND   LOSS 

To  the  Stiideyit:  Read  the  introductory  matter  and  then  journalize  the  following 
transactions. 

Rule  XVIII. — Debit  Expense  for  all  expetises  incurred  by  the  business,  such  as  employees 
salaries,  rent,  fuel,  books  and  stationery. 

Were  it  desired  to  keep  a  more  detailed  record,  this  could  be  done  by  keeping  an 
account  with  Advertising,  Salaries,  Rent,  etc. 

Rule  XIX. — Debit  Profit  and  Loss  for  all  immediate  losses,  and  credit  it  for  all  immediate 
gains. 


SHIPMENTS    AND    CONSIGNMENTS  (J5 

If  an  article  which  has  been  charged  to  Expense  or  Profit  and  Loss,  is  afterward 
sold,  such  account  must  be  credited  for  the  amount  of  the  sale. 

Sept.  1,  19 — .  Bought  of  J.  Cook  &  Co.  for  cash,  set  of  books  for  store,  for 
$15.50. 

Expense  is  debited. 

Sept.  2.  Rented  store  on  State  Street,  paying  cash  in  advance  for  one  month's 
rent,  $250. 

Sept.  3.  James  Allen  having  failed,  has  compounded  with  me  at  50%.  Received 
cash,  $300;  lost  the  remainder,  $300.     Total  $600. 

Sept.  5.     Paid  David  Spencer,  clerk,  cash  for  one  month's  services,  $100. 

Sept.  6.  We  found  this  morning  that  our  store  was  entered  in  the  night  by 
burglars,  who  stole  cash,  $200;  sundry  articles  of  Dry  Goods  amounting  to  $75. 
Total  $275. 

Profit  and  Loss  Dr. 

Sept.  9.  The  thieves  who  entered  our  store  having  been  arrested,  the  officers 
have  returned  to  us  cash,  $50;  also  goods  amounting  to  $45.     Total  $95, 

Cr.  Profit  and  Loss.     Why? 

Sept.  10.  Paid  my  note,  favor  of  Henry  Simpson,  by  giving  him  a  new  note 
for  $300,  and  paying  him  as  an  inducement,  cash,  $10. 

Sept.  12.     Paid  cash  for  postage  stamps,  $8. 

Sept.  15.     Paid  Tribune  s  bill  for  advertising  to  date,  $75. 

Sept.  18.  H.  Williams  owes  me  on  account  $84;  he  having  become  insolvent, 
the  amount  is  lost. 

Sept.  18.  Compromised  with  Henry  Young,  who  has  failed,  he  paying  only 
25%  on  his  note  of  $500.     Received  in  cash,  $125;  lost,  $375. 

Sept.  30.  Having  sub-let  a  portion  of  our  store  for  the  month  of  October,  we 
have  collected  the  rent  in  cash  and  issued  the  following 

RECEIPT 


-QC^^^^^.^■C'<:C^-'^n.■-^ 


In  writing  receipts  for  various  purposes  the  last  line  may  read,  "in  full,"  "m 
full  of  account,"  "to  apply  on  account,"  etc.,  as  the  case  may  be. 

Write  the  receipts  for  Sept.  30,  "in  full  of  account"  in  each  case. 


66 


MODERN    ACCOUNTANT 


Sept.  30.  Paid  the  followingf  bills  in  cash:  J.  D.  Harvey,  for  one  month's  rent 
of  store,  $250;  Chicago  Gas  Co.,  for  one  month's  light,  $20;  Chicago  Times  for  adver- 
tising, Slo.     Total  $285. 

Sept.  30.  Purchased  of  W.  R.  Hill  &  Co.,  on  account,  a  quantity  of  office  sta- 
tionery for  use  in  store,  amounting  to  $35. 

Sept.  30.  Sold  to  Williams  &  Co.,  for  cash,  1^  tons  of  Coal  at  $6.50,  $9.75,  from 
our  winter's  supply. 

Sept.  30.  The  assignee  of  H.  Williams  having  converted  the  assets  into  cash, 
has  paid  me  a  dividend  of  25%  of  my  claim,  amounting  to  $21. 

Since  this  item  has  been  charged  to  Profit  and  Loss,  we  must  now  credit  Profit  and  Loss  for 
the  amount  received,  as  we  consider  it  actually  a  gain. 

Sept.   30.     On  examining   our   cash    at   night,    we  find  a  $20  counterfeit  bill, 

received  from  an  unknown  customer. 

Sept.  30.     Sold  for  cash,  Postage  Stamps  amounting  to  $1.60. 

EXERCISE  XXIX 

JOURNALIZING  PROPRIETOR'S  ACCOUNT 

To  the  Student:  Read  the  introductory  matter  and  then  journalize  the  following 
transactions. 

The  Proprietor  of  a  business  must  have  an  account  opened  with  himself  in  order 
to  show  his  relation  to  the  business. 

The  term  Stock  is  sometimes  used  instead  of  the  proprietor's  name. 

Before  a  set  of  books  can  be  opened  a  statement  of  Resources  and  Liabilities 
must  be  made.  The  proprietor  is  then  to  be  credited  with  the  amount  of  his 
resources.  He  will  also  be  credited  with  any  future  investments  which  he  may  make, 
as  they  are  made.  He  should  be  debited  with  his  liabilities,  at  the  commencement 
of  business,  and  also  for  any  amounts  withdrawn  from  the  business  for  private  use. 

The  proprietor's  account  is  very  similar  to  any  other  personal  account,  and  is  to 
be  treated  upon  the  same  principles.  He  is  accountable  to  the  business  for  every 
dollar  which  he  takes  out  of  it,  and  the  business  is  accountable  to  him  for  every  dollar 
which  he  has  put  into  it.  He  is  not  the  business,  but  a  distinct  and  separate  element 
or  character,  who  merely  coiiducts  the  business.  He  is  therefore  debited  for  amounts 
which  lie  owes  the  business  and  credited  for  amounts  which  tJie  business  oives  him,  the 
same  as  any  outside  party  would  be. 
Rule    XX. — Debit  the  different  kinds  of  property  invested,  and  credit  the  proprietor  for  the 

amoujit  of  his  investment. 
Rule  XXI. — Debit  the  proprietor  for  the  amount  of  Jiis  liabilities  and  for  all  amounts 
zi'ithdrawti  for  private  use. 

The  resources  invested  in  a  business  must  be  debited,  since  they  are  received  by 
the  concern,  and  the  liabilities  must  be  credited,  under  proper  titles,  because  they 
have  produced  these  resources  in  whole  or  in  part. 

Oct.  1,  19 — .  Henry  Smith  commenced  business  this  day  with  a  cash  capital  of 
$3000. 


Oct. 


Cash, 


Henry  Smith, 


3000 


3000 


PARTNERSHIP    ACCOUNTS  67 

Oct.  5.  Geo.  Walters  commenced  business  with  the  following:  Cash  on  hand, 
$1800;  Mdse. ,  $3400;  Lyman  Munger's  note  for  $600;  John  Jenny  owes  on  account, 
$150.     Total  $5950. 

Oct.  6.  Geo.  Walters  owes,  on  commencing  business:  Notes  outstanding, 
$450;  B.  F.  Munson  on  account,  $180.     Total  $630. 

Oct.  7.  R.  E.  Parker  commenced  business  this  day  with  the  following  resources: 
Mdse.  on  hand,  $1800;  cash  in  bank,  $750;  Store  and  Lot  valued  at  $2000.  Total 
$4550.  His  liabilities  are:  David  C.  Cook  on  note,  $400;  Henry  Simmons  on 
account,  $80.     Total  $480. 

Debit  the  Resources  and  credit  the  proprietor  for  the  full  amount  of  his  investment  and  debit 
him  for  his  liabilities. 

Oct.  8.  R.  E.  Parker  has  this  day  paid  in  cash,  Grocery  bill  for  family  amount- 
ing to  $35. 

Oct.  9.  J.  M.  Barker's  assets  at  commencing  are:  Cash,  $3500;  Mdse.,  $4800; 
notes  against  sundry  persons,  amounting  to  $1250,  and  an  account  against  John  D. 
Cooper  for  $675.  Total  $10225.  His  liabilities  are:  Outstanding  notes  amounting 
to  $1875,  and  an  account  due  Geo.  W.  Porter  for  $250.     Total  $2125 

JOURNALIZING  PARTNERSHIP  ACCOUNTS 

Each  Partner  in  a  business  must  have  an  account  upon  the  books  of  the  business 
in  order  to  exhibit  his  relation  to  other  partners  and  to  the  business. 

When  two  or  more  persons  enter  into  a  co-partnership,  a  statement  must  first  be 
made  of  the  property  to  be  invested  by  each.  Each  partner  is  then  credited  with  the 
amount  of  his  investment.  He  should  also  receive  due  credit  for  all  future  invest- 
ments made  by  him. 

If  liabilities  of  any  partner  are  assumed,  at  the  opening  of  business,  by  the  firm 
(which  is  not  usually  done),  the  partner  should  be  charged  with  the  amount  of  such 
obligation. 

It  will  thus  be  seen  that  each  partner's  account  in  a  co-partnership  enterprise  is 
treated  in  a  similar  manner  to  the  account  of  a  single  proprietor,  as  previously 
explained. 

Rule    XXII. — Debit  tlie  different  kinds  of  property  invested,  and  credit  each  partner  for 

the  ajnonnt  of  his  investment. 
Rule  XXIII. — Debit    each  partner  for  his   liabilities    assumed    by    the  firm    and  for 
withdrawals. 

When  a  partner  goes  o?it  of  the  business  we  make  exactly  the  reverse  entry  to 
that  of  an  investment — debit  him  and  credit  the  assets  which  he  carries  with  him. 

Oct.  14,  19 — .  M.  Williams  and  James  Turner  have  this  day  entered  into  part- 
nership. 

M.  Williams  invests:  Cash  on  hand,  $2000;  Mdse.  in  store,  $3000;  bills  receiv- 
able, $500.     Total  $5500. 

James  Turner  invests:  Cash  in  bank,  $3000;  account  against  John  Doe,  which 
the  firm  accepts,  $1000.     Total  $4000. 

Oct.  14.     M.  Williams  has  withdrawn  cash  for  private  use,  $125. 

Oct.  15.  J.  W.  Webster  and  F.  Durell  have  completed  arrangements  for  the 
consolidation  of  their  different  mercantile  pursuits.  The  style  of  the  firm  will  be 
J.  W.  Webster  &  Co. 


6S  MODERN    ACCOUNTANT 

J.  W.  Webster  invests  his  present  stock  of  Hardware,  valued  at  $8000;  notes  on 
hand,  $575;  cash  on  hand,  $425,  Total  $9000.  He  owes  the  following  debts  which 
the  firm  assumes:     Harrison  Gardner,  $300;  bills  payable,  $500.     Total  $800. 

F.  Durell  invests:  Stock  of  Agricultural  Implements,  valued  at  $1800;  notes  on 
hand,  $2500;  cash,  $3000.     Total  $7300. 

Oct.  20.  F.  Durell  has  this  day  received  a  bequest  from  a  deceased  relative, 
cash,  $1500,  which  he  has  invested  in  the  business. 

Oct.  25.  The  firm  of  J.  W.  Webster  &  Co.  has  this  day  admitted  its  head 
salesman,  Samuel  Drew,  as  a  third  partner  in  the  business,  who  invests,  cash,  $3000. 

Oct.  25.  The  firm  of  Brown  &  Graham  has  this  day  dissolved,  James  Brown 
retiring  from  the  business.  Geo.  Graham  continues  the  business,  and  pays  the  retir- 
ing partner  for  his  interest,  cash,  $4000  from  the  business. 

Oct.  27.  The  firm  of  Anderson  &  Naegele  is  to  dissolve  partnership,  M.  A. 
Anderson  withdrawing  from  the  business  and  F.  D.  Naegele  continuing  in  same. 
Anderson  is  to  be  paid  $5000,  which  Naegele  procures  from  his  private  estate. 

Oct.  28.  The  firm  of  Davis  &  Wilson  has  this  day  been  dissolved  by  mutual 
consent.  E.  C.  Davis  retires  from  the  firm,  and  Wm.  Wilson  continues  the  business 
and  pays  the  retiring  partner  for  his  share :     Note  at  30  days,  $2000,  and  the  following 

CHECK 


r.HTf.Af.o,       (  y/Z^  Zfy     IMP  ^     xt».  1^5o 


^v^uETTE       Building, 


Pa\'  to  tiik  ohdek  of (/O  ^  C    ^^  y^^^-r^  -— — . ^  /^^^\ 

— — llni.i.Ans 


(:^S^^<^.--i^CzX^,.^7^^<;4^^-..-^^^^^ 


^y/-7YyJyy.-i^^ 


Note  that  the  payment  was  made  from  Wilson's  personal  estate. 
Write  the  check  as  above  and  the  note  to  accompany  it. 

QUESTIONS  FOR  REVIEW 

1.  What  is  a  Draft?  2.  What  is  a  Bill  of  Exchange?  3,  Who  are  the  parties  to  a  draft?  4.  De- 
fine the  drawer,  drawee  and  payee.  5.  Give  the  theory  of  drafts.  6.  Define  a  Sight  Draft.  7.  Define 
a  Time  Draft.  8.  Define  an  Acceptance.  !).  When  you  draw  a  draft  or  order  on  a  person  what  do 
you  credit?  10.  When  a  person  draws  on  you  what  entry  do  you  make?  11.  What  entry  do  you  make 
when  you  receive  a  draft  drawn  by  another  person  upon  some  third  party?  12.  What  are  Personal 
Accounts?  13.  What  do  we  mean  b}'  the  expression  "  on  account?"  14.  What  is  a  Bill?  15.  How 
do  you  receipt  a  bill?  16.  When  do  you  debit  a  person?  17.  When  do  you  credit  a  person?  18.  When 
you  buy  of  a  person  on  account  what  do  you  credit?  19.  When  you  sell  to  a  person  on  account 
what  do  you  credit?  20.  When  you  pay  a  person  on  account,  what  entry?  21.  When  a  person  pays 
you  on  account,  what  entry?  22.  Define  Interest.  23.  When  do  you  debit  interest?  24.  When  do 
you  credit  interest?    2.5.  Define  Premium.     26.  Define  Discount.     27.  When  do  you  debit  premium? 


ACCOUNTS—  Continued 


69 


28,  When  do  you  credit  premium?  29.  When  do  you  debit  discount?  30.  When  do  you  credit  discount? 
31.  When  merchandise  is  shipped  away  for  sale  on  commission,  what  name  do  you  give  it?  32.  Why 
do  merchants  ship  goods  to  commission  merchants  for  sale  instead  of  selling  it  themselves?  33.  What 
is  a  Consignment?  34.  Who  is  the  Consignor?  35.  Who  is  the  Consignee?  36.  What  is  an  Account 
Sales?  37.  Define  Net  Proceeds.  38.  What  is  a  Shipment  on  Joint  Account?  39.  If  you  pay 
charges  on  a  shipment   what  do  you  debit?     40.  When  you  receive  an  Account  Sales,  what  entry? 

41.  When  30U  receive  a  consignment  for  sale,  and  pay  charges  on  same,  what  entry  do  you  make? 

42.  When  you  sell  goods  belonging  to  a  consignment  what  entry  do  you  make?  43.  After  the  con- 
signment is  sold,  and  you  wish  to  charge  up  your  commission,  how  is  it  done?  44.  How  do  you  enter 
the  Net  Proceeds  when  you  render  an  Account  Sales  to  the  shipper?  45.  Define  Expense.  4G.  Define 
Profit  and  Loss.  47.  For  what  is  Expense  debited?  48.  For  what  do  you  debit  Profit  and  Loss? 
49.  Before  a  set  of  books  can  be  opened  what  must  be  done?  50.  How  is  the  term  Stock  used  by 
some  accountants?  51.  For  what  do  you  credit  the  proprietor?  52.  For  what  do  you  debit  the 
proprietor?  53.  In  what  respects  does  the  proprietor's  account  resemble  any  other  personal  account? 
54.  When  the  proprietor  or  a  partner  makes  an  investment  what  entry  do  you  make?  55.  What  do 
you  credit?  56.  If  the  proprietor  or  partner  withdraws  resources  what  do  you  debit?  57.  What  do 
you  credit?  58.  If  the  firm  assumes  an  obligation  for  one  of  the  partners  what  entry  is  made? 
59.  When  a  new  partner  is  admitted  to  the  firm  what  entry  is  made?  60.  When  a  partner  retires 
from  business  what  entry  is  made? 

ACCOUNTS— Continued 
EXERCISE  XXX 

To  the  Student:  Before  recording  the  transactions  for  April,  carefully  read  the  fol- 
lowing instructions:  Enter  all  sales  of  merchandise  in  the  Sales  Book,  as  directed  on 
page  70.  Journalize  all  other  items,  and  write  up  the  business  papers  required. 
Have  your  work  approved. 

How  Entries  Are  to  be  Recorded. — In  case  a  purchase  is  made  in  which  a  portion 
only  is  paid,  a  Journal  entry  is  first  made  as  if  nothing  had  been  paid,  and  then 
another  Journal  entry  is  made  for  the  payments,  as  if  paid  on  account,  thus  separa- 
ting the  purchase  and  the  payment,  as  if  distinct  and  separate  transactions. 

Thus,  suppose  we  buy  from  John  Brown  a  bill  of  goods  amounting  to  $500  and 
give  in  part  payment  our  note  for  $200  and  cash  for  $200.  This  can  be  recorded  in 
two  ways — by  the  partial  entry  method  and  by  the  full  entry  method. 

Journal  entry  by  partial  method: 


Mdse., 


Bills  Pay., 

Cash, 

John  Brown, 


500 


200 
200 
100 


70  MODERN    ACCOUNTANT 

Journal  entries  by  full  entry  method: 


Mdse., 


John  Brown, 


John  Brown, 


Cash, 
Bills  Pay., 


500 


400 


500 


200 
200 


Skeleton  Account.-;  showing  both  methods  posted  as  affecting  Brown's  account: 
First  Method.  Second  Method. 


JOHN  BROWN 


100 


JOHN  BROWN 


400 


500 


The  object  of  the  second  method  is  to  have  the  Ledger  account  show  the  entire 
transaction.  At  the  end  of  the  month,  or  other  stated  time,  when  a  Statement  of 
Account  is  rendered  to  the  customer,  it  will  show  his  purchases  or  debits  and  also 
his  payments  or  credits,  thus  exhibiting  clearly  before  him  the  true  condition  of  his 
account. 

INTRODUCTION   OF   SALES  BOOK 

In  this  set  the  Sales  Book  is  introduced.  The  simplest  form  of  this  book  has 
rulings  similar  to  the  Journal.  All  sales  of  merchandise  in  detail,  together  with  the 
date  of  sale,  name  and  address  of  the  buyer,  are  entered  in  it.  The  amount  of  each 
sale  is  posted  direct  from  it  to  the  debit  of  the  purchaser's  account  in  the  Ledger. 
At  the  end  of  the  month  the  total  column  is  footed  and  the  sum  is  posted  to  the  credit 
side  of  the  merchandise  account  in  the  Ledger,  thus  maintaining  the  necessary 
equilibrium  in  that  book. 

In  case  it  becomes  necessary  to  use  more  than  one  page  for  a  Sales  Book,  foot 
the  total  column  of  the  first  page,  and  opposite  the  footing  in  the  remark  column 
write  "Amount  forward."  On  the  first  line  of  the  succeeding  page  write  "Brought 
forward,"  placing  the  amount  in  the  total  column,  and  so  on  with  succeeding  pages. 
Making  a  record  in  the  Sales  Book  of  all  sales  relieves  the  Journal  of  just  so  much, 
but  if  there  are  any  payments  either  in  full  or  partial  settlement  of  a  bill,  these  must 
be  made  in  the  Journal  and  credited  to  the  customer's  account  in  the  Ledger.  This 
is  in  accordance  with  the  method  explained  at  the  beginning  of  this  exercise.  See 
form  of  Sales  Book,  page  71. 

TRANSACTIONS 

April  1,  19 — .  C.  E.  Kelly  commenced  business  this  day  with  a  cash  capital  of 
$2000. 

April  2.     Paid  cash  for  rent  of  store  in  advance,  6  months,  at  $75,  $450. 

April  3.  Bought  of  J.  D.  Field  &  Co.,  on  our  note  at  30  days,  payable  at  our 
office,  8%  interest.  50  bbl.  Minnesota  Flour  at  $6.  $300. 


TRANSACTIONS 


71 


April  5.  Bought  of  Wheeler  &  Andrews,  for  cash,  5  sacks  Rio  Coffee  at  $12.50, 
$62.50;  10  boxes  Boston  Crackers  at  $1.60,  $16;  5  bbl.  N.  O.  Sugar  at  $22.50,  $112.50; 
8  bbl.  N.  Y.  Salt  at  $2.50,  $20.      Total  $211. 

April  7.     Sold  to  W.  Hunter  on  account,  20  bbl.  Minnesota  Flour  at  $6.75,  $135. 

April  8.  Sold  Stephen  Whitney,  3  bbl.  N.  O.  Sugar  at  $26.25,  $78.75.  Received 
in  payment,  his  draft  on  H.  Williams  at  10  days'  sight. 

April  9.  Bought  of  S.  A.  Maxwell  &  Co. ,  for  cash,  set  of  blank  books  for  store, 
$18.50. 

April  11.  Bought  of  W.  H.  Southard,  200  bbl.  Winter  Apples  at  $2.50,  $500. 
Gave  in  payment  our  note  at  30  days  for  $200;  cash,  $200;  balance  on  account,  $***. 

April  12.  Sold  Louis  Stinson,  100  bbl.  Winter  Apples  at  $2.75,  $275.  Received 
in  payment  200  bu.  Potatoes  at  75^',  $150;  his  note  at  15  days  for  balance,  $***. 

April  14.  C.  E.  Kelly  has  received  a  legacy  from  a  deceased  relative,  consisting 
of  10  shares  Illinois  Central  Railroad  Stock  at  $108,  $1080;  cash,  $1000.  Total 
$2080,  which  he  has  invested  in  the  business. 

SALES  BOOK 


19— 

Apr. 


12 
16 

19 
25 


27 


L.  F. 


W.  Hunter, 
20  bbl.  Minnesota  Flour, 

Stephen  Whitney,  Draft 

3  bbl.  N.  O.  Sugar, 

Louis  Stinson, 

100  bbl.  Winter  Apples, 

J.  I.  Holister,  Moline,  111., 
3  sacks  Rio  Coffee, 
5  boxes  Boston  Crackers, 

Geo.  Keller, 
50  bbl.  Winter  Apples, 

W.  D.  Waller, 
10  bbl.  Minn.  Flour, 
50     "     Winter  Apples, 
3     "     Cider  Vinegar,  90  gal., 
5  coils  in.  Rope,  400  lb., 
100  bu.  Pota-toes, 

J.  R.  Wheeler, 
50  bu.  Potatoes, 
3  bbl.  N.  Y.  Salt, 
5  coils  in.  Rope,  400  lb., 


On  account, 
6  75 

135 

H.  Williams, 
26  25 

78 

Sunds., 
2  75 

275 

On  account, 

14  00 

1  80 

42 
9 

51 

Note  60  da»ys, 
2  80 

140 

On  account, 

6  75 

2  80 

30 

05 

1  00 

67 

140 

27 

20 

100 

50 

354 

Sunds., 
85 

•  2  80 
05 

42 

8 

20 

50 
40 

70 

75 


50 


90 


April  16.  Sold  J.  I.  Holister,  Moline,  111.,  on  account,  3  sacks  Rio  Coffee  at $14, 
$42;  5  boxes  Boston  Crackers  at  $1.80,  $9.     Total  $51. 

April  17.      Paid  cash  for  Postage  Stamps,  $5. 

April  19.  Sold  Geo.  Keller,  on  his  note  at  60  days,  50  bbl.  Winter  Apples  at 
$2.80,  $140. 

April  21. 

April  22. 

April  22. 


Received  cash  of  W.  Hunter,  on  account,  $75. 

Paid  W.  H.  Southard,  on  account,  cash,  $60. 

Received  cash  of  H.  Williams  for  Stephen  Whitney's  draft  on  him  at 


10  da)''s'  sight,  $78.75,  received  on  the  8th  inst. 


72  MODERN    ACCOUNTANT 

April  24.  Bought  of  James  Berry,  15  boxes  German  Soap,  6001b,  at  If,  $42;  10 
coils  Inch  Rope,  800 lb,  at  4^-,  $32;  5  bbl.  Cider  Vinegar,  150  gal.,  at  25r/,  $.37.50,  15 
chests  Y.  H.  Tea,  6751b,  at  45^,  $303.75.  Total  $415.25.  Gave  in  payment  Geo. 
Keller's  note  of  the  19th  inst.  at  6%  discount;  face  of  note,  $140;  discount  off,  55  days 
$1.28;  our  note  at  30  days  for  $150;  cash,  $100;  balance  on  account,  $■>=*.** 

April  25.  Sold  to  W.  D.  Waller,  on  account,  10  bbl.  Minnesota  Flour  at  $6.75, 
$67.50;  50  bbl.  Winter  Apples  at  $2.80,  $140;  3  bbl.  Cider  Vinegar,  90  gal.,  at  30^-, 
$27;  5  coils  Inch  Rope,  4001b,  at  5^',  $20;  100  bu.  Potatoes  at  $1.00,  $100.  Total 
$354.50. 

April  26.  Drew  at  10  days'  sight  on  J.  I.  Holister,  Moline,  111.,  and  discounted 
draft  at  First  National  Bank.  Face  of  draft,  $51.  Discount  off,  25^-.  Net  proceeds 
received  in  cash,  $50.75. 

April  26.     Sold  for  cash,  Postage  Stamps,  $1.80. 

April  27.  Sold  J.  R.  Wheeler,  50  bu.  Potatoes  at  85^-,  $42.50;  3  bbl.  N.  Y.  Salt 
at  $2.80,  $8.40;  5  coils  Inch  Rope,  4001b,  at  5^-,  $20.  Total  $70.90.  Received  in  pay- 
ment  his  note  at  30  days  for  $50;  cash  for  balance,  $**.**. 

April  27.  Louis  Stinson  has  paid  his  note  of  the  12th  inst.  and  interest  thereon 
by  check  on  Third  National  Bank.  Face  of  note,  $125;  interest,  15  days,  at  8%,  42^'. 
Total  $125.42. 

April  28.     Received  cash  of  W.  Hunter,  to  apply  on  his  account,  $25. 

April  28.  Received  cash  for  6  per  cent,  dividend  on  10  shares  Illinois  Central 
Railroad  Stock,  $60. 

April  29.  Paid  our  note,  favor  of  J.  D.  Field  &  Co.,  before  due;  also  interest  on 
same  to  date.  Face  of  note,  $300;  interest  on  same,  26  days,  at  8%,  $1.73.  Total 
$301.73.     Gave  in  payment  sight  draft  on  W.  D.  Waller  for  $200.     Cash  for  balance, 

April  29.  Sold  A.  J.  Bailey,  2  bbl.  Cider  Vinegar,  60  gal.,  at  30^,  $18;  5  bbl.  N. 
Y.  Salt,  at  $2.75,  $13.75;  10  bbl.  Minnesota  Flour  at  $7,  $70:  5  chests  Y.  H.  Tea, 
2251b,  at  60^,  $135.  Total  $230.75.  Received  in  payment,  cash,  $100;  his  note  at 
30  days  for  balance,  with  6%  interest  added.  Balance  of  bill,  $136.75;  interest 
added,  68^.     Face  of  note,  $137.43. 

April  30.  Received  of  W.  D.  Waller,  on  account,  his  note,  at  30  days  for  $75; 
cash,  $60.     Total  $135. 

Business  Papers  required  for  April : 
Note  favor  J.  D.  Field  &  Co.,  April  3. 
Receipt  from  W.  H.  Southard,  April  22. 
Check  of  Louis  Stinson,  April  27. 

EXERCISE   XXXI 

To  the  Student:     Open  the  following  Ledger  accounts; 

C.  E.  Kelly,  >^  page;  W.  L.  Parsons,  y-z  page;  Merchandise,  1  page:  111.  Central 
R.  R.  Stock,  10  lines;  Real  Estate,  6;  Fixtures,  8;  Expense,  12;  Shipment  G.  S. 
Hubbard  &  Co.,  Baltimore,  8;  Discount,  9;  Interest,  12;  Loss  and  Gain,  20;  Cash,  1 
page;  Bills  Payable,  15;  Bills  Receivable,  15;  W.  Hunter,  8;  W.  H.  Southard,  10; 
J.  L  Holister,  Moline,  111.,  6;  W.  D.  Waller,  10;  James  Berry,  10;  W.  M.  Hoyt  & 
Co.,  8;  J.  H.   Moore  &  Co.,  8;  James  M.  Graham,  Galesburg,  111.,  8;  C.  C.  Thomp- 


CLOSING  73 

son,  8;  A.  J.  Bailey,  8;  Hartford  Insurance  Co.,  8;  Stephen  Whitney,  6;  Louis 
Stinson,  8;  George  Keller,  0;  J.  R.  Wheeler,  8;  J.  T.  Armour,  Springfield,  111.,  6; 
J.  R.  Rumsey,  Indianapolis,  Ind.,  6;  Cash  Dis. ,  6. 

EXERCISE  XXXII 

To  the  Sttcdftit:  First  post  the  separate  items  in  the  Sales  Book  to  the  debit  of 
the  proper  personal  accounts  in  the  Ledger.  Next  post  the  footings  of  the  Sales  Book 
as  directed.     Lastly,  post  the  Journal,  observing  the  directions  given  in  Exerctse  IX. 

Wlicn  posting  the  sales  footing  to  the  Ledger,  use  the  explanation  "Total  from 
Sales  Book"  and  the  page  of  the  Sales  Book  from  which  the  amount  was  taken.  Write 
the  ledger  page  in  the  folio  column  of  the  Sales  Book. 

As  soon  as  j'ou  have  posted  the  transactions  for  the  month  of  April,  you  will  take 
a  trial  balance  as  directed  in  Exercise  IX.  Include  in  the  trial  balance  only  those 
items  having  debit  or  credit  items.      Do  not  include  an  account  that  balances. 

Test  your  trial  balance  with  the  following 

RESULTS 

Cash  on  hand $2451.39 

Bills  Receivable  on  hand 262.43 

Bills  Pajable  unpaid 350.00 

Personal  Accounts  owing  us 54.50 

Personal    Accounts   we    owe 66.53 

Copy  below  the  trial  balance  the  following 

INVENTORY  OF  PROPERTY  UNSOLD,  APRIL  30,  19- 


10  bbl.  Minnesota  Flour, 

@ 

$     6.00 

60 

00 

2    "     N.  O.  Sugar, 

@ 

22.50 

45 

00 

50  bu.  Potatoes, 

@ 

.75 

37 

50 

15  boxes  German  Soap,  600  lb., 

@ 

.07 

42 

00 

5      "      Boston  Crackers, 

@ 

1.60 

8 

00 

10  chests  Young  Hyson  Tea,  450  !b.. 

@ 

.45 

202 

50 

2  sacks  Rio  Coffee, 
10  shares  Illinois  Central  Railroad  Stock, 

@ 

@ 

12.50 
106.00 

25 

00 

420 
1060 

00 

00 

5  months'  rent  of  store,  paid  in  advance, 

as 

75.00 

375 

00 

EXERCISE  XXXIII 

To  the  Student:  You  are  now  ready  to  close  the  Ledger.  Read  directions  for 
closing  the  Ledger  given  in  Exercise  XIV. 

Observe  the  following  steps  in  closing: 

First,  Credit  proper  accounts  with  inventories.  When  these  accounts  are  closed 
and  ruled  up  you  will  bring  down  the  "Balance  Inventories." 

Second,  Close  the  following  accounts  to  Loss  and  Gain,  transferring  the  differ- 
ences to  Loss  and  Gain  account:  Mdse. ,  111.  Central  R.  R.  Stock,  Expense,  Dis- 
count and  Interest.  Test  Loss  and  Gain  account;  that  is,  the  difference  credited 
to  the  Proprietor's  account  should  show  a  net  capital  at  closing  of  $4206.79.  If 
correct,  close  Loss  and  Gain  account  and  the  Proprietor's  account. 

Third,  Close  all  remaining  accounts  to  balance,  bringing  down  the  balances 
except  do  not  close  a  real  account  that  has  but  a  single  debit  or  credit  item. 

Fourth,  Take  a  trial  balance  of  the  balances  brought  down  and  then  make  out  a 
Statement  for  April.      (See  Exercise  XIV.) 


74  MODERN  ACCOUNTANT 

EXERCISE   XXXIV 

To  the  Student:  Journalize  transactions  for  May.  Write  up  business  papers  called 
for  at  end  of  transactions  and  have  the  same  approved. 

The  transactions  for  May  are  a  continuation  of  the  business  done  in  April,  a 
partner  being  admitted.  The  transactions  on  May  3,  4,  28  and  30  require  special 
entries  explained  in  Exercise  XXX. 

TRANSACTIONS 

May  1,  19 — .  C.  E.  Kelly  has  this  day  admitted  W.  L.  Parsons  as  a  partner, 
who  is  to  share  equally  in  the  gains  and  losses.     The  firm  name  is  to  be  Kelly  &  Parsons. 

W.  L.  Parsons  invests  store  building  and  lot,  No.  264  River  Street,  valued  at 
$5000,  on  which  there  is  a  mortgage  of  $1000,  due  in  one  year,  bearing  7%  interest, 
which  the  firm  assumes. 

May  3.  Bought  of  W.  H.  Southard,  300  bbl.  Winter  Apples  at  $2.50,  $750;  25 
sacks  Rio  Coffee,  35001b,  at  10^,  $350;  10  bbl.  Cider  Vinegar,  300  gal.,  at  20^,  $60. 
Total  $1160.  Gave  in  payment,  cash,  $500;  our  note  at  30  days  for  $500;  balance 
on  account,  $***. 

May  4.  Bought  of  W.  M.  Hoyt  8c  Co.  20  bbl.  N.  O.  Sugar  at  $25,  $500;  100 
boxes  Boston  Crackers  at  $1.80,  $180;  100  boxes  Sperm  Candles,  1986  Bb,  at  25^-, 
$496.50.  Total  $1176.50.  Paid  freight  on  same  in  cash,  $9.80.  Gave  in  payment 
for  goods,  our  note  at  00  days  for  $500,  with  interest  added  at  5%,  $4.17.  Face  of 
note,  $504.17;  balance  on  account,  $***.**. 

May  6.  Sold  to  W.  D.  Waller,  on  account,  10  bbl.  Minnesota  Flour  at  $7,  $70; 
2  bbl.  N.  O.  Sugar  at  $26,  $52;  25  boxes  Boston  Crackers  at  $1.95,  $48.75;  10  boxes 
Sperm  Candles,  1981b,  at  35^,  $69.30.     Total  $240.05. 

May  7.  Shipped  via  B.  &  O.  R.  R.  to  G.  S.  Hubbard  &  Co.,  Baltimore,  Md.,  for 
sale  on  our  account  and  risk,  10  bbl.  N.  O.  Sugar  at  $25,  $250;  200  bbl.  Winter 
Apples  at  $2.50,  $500.  Total  $750.  Insured  same  in  Hartford  Insurance  Co.  for 
$600,  paying  premium  in  cash  at  2%,  $12. 

Shipments  are  invoiced  at  the  buying  price. 

May  10.  Received  cash  of  J.  R.  Wheeler  m  payment  for  his  note  and  interest 
to  date.      Face  of  note,  $50;  interest  at  6%, 11  <{■.      Total  $50.11. 

May  11.  Paid  cash  for  our  note  and  interest,  favor  W.  H.  Southard,  of  the 
11th  ult.     Face  of  note,  $200;   interest  on  same  at  0%,  $1.     Total  $201. 

May  15.  Have  this  day  moved  into  our  new  store.  No.  264  River  Street.  Paid 
cash  for  expenses  of  moving  $265.30-  also  for  Counters,  Shelving  and  Furniture, 
$785.25.     Total  $1050.55. 

Open  an  account  with  Fixtures. 

May  16.  Sold  J.  I.  Holister,  Moline,  111.,  on  account,  10  sacks  Rio  Coffee,  14001b, 
at  13</,  $182;  5  bbl.  Cider  Vinegar,  150  gal.,  at  25^',  $37.50;  1  chest  Y.  H.  Tea,  451b, 
at  50./,  $22.50.     Total  $242. 

May  18.  Sold  J.  T.  Armour.  Springfield.  111.,  20  boxes  Sperm  Candles,  397  56, 
at  80^'.  $119.10;  10  bbl.  N.  O.  Sugar  at  $30,  $300;  25  bu.  Potatoes  at  909^-,  $22.50; 
5  sacks  Rio  Coffee,  7001b.  at  15^,  $105.  Total  $546.60.  Discount  off  at  5%  for  cash, 
$**.**.     Received  cash,  $***.**. 

May  18.     Bought  of  Safety  Lock  Co.,  for  cash,  1  Office  Safe,  $250. 

May  20.     Bought  of  James  Berry,  on  account,  150  bbl.  Minnesota  Flour  at  $5.75, 


TRANSACTIONS  75 

$862.50;  200  bu.  Potatoes  at  80^.  $160;  150  boxes  German  Soap,  6000  ft),  at  6^,  $360. 
Total  $1382.50. 

May  20.  Bought  of  J.  H.  Moore  &  Co.,  on  account,  1  set  of  Furniture  for  W.  L. 
Parsons,  $175. 

May  21.  Paid  W.  H.  Southard,  on  account,  our  note  at  30  days  for  $75;  cash. 
$85.     Total  $160. 

May  21.  Sold  to  Preston,  Kean  &  Co.,  for  cash,  5  shares  Illinois  Central  R.  R. 
Stock  at  $109,  $***. 

May  23.  Sold  to  J.  R.  Rumsey,  Indianapolis,  on  his  note  at  30  days,  with  inter- 
est at  5%  added,  100  boxes  German  Soap,  400016,  at  7>^^,  $300;  25  boxes  Boston 
Crackers  at  $2,  $50;  50  bu.  Potatoes  at  $1.15,  $57.50;  5  bbl.  Cider  Vinegar,  150  gal., 
at  25^,  $37.50.     Total  $445.     Interest  at  5%,  $1.85.     Face  of  note,  $446.85. 

May  25.  Drew  on  W.  D,  Waller  at  20  days,  and  discounted  draft  at  First 
National  Bank.  Face  of  draft,  $200.  Discount  oflf,  67c.  Net  proceeds  received 
in  cash,  $199.33. 

May  25.  Received  advice  of  the  total  destruction  by  fire  of  the  warehouse  of 
G.  S.  Hubbard  &  Co.,  Baltimore,  including  our  shipment  of  the  7th  inst.  Hartford 
Insurance  Co.  held  for  face  of  policy. 

May  26.  Sold  to  James  M.  Graham,  Galesburg,  111.,  on  account,  50  bbl.  Min- 
nesota Flour  at  $7,  $350;  50  bbl.  Winter  Apples  at  $2.60,  $130.     Total  $480. 

May  27.  Accepted  James  Berry's  draft  on  us  at  30  days'  sight,  favor  Union 
Trust  Co.,  for  $1000. 

May  28.  Sold  C.  C.  Thompson,  Minneapolis,  Minn.,  50  boxes  Sperm  Candles, 
993  ft),  at  25^5,  $248.25;  25  boxes  German  Soap,  1000  R),  at  80,  $80;  55  boxes  Boston 
Crackers  at  $1.75,  $96.25.  Total  $424.50.  Received  in  payment  his  note  at  30  days 
for  $150;  James  Berry's  order  on  us  for  $150;  cash,  $100;   balance  on  account,  $**.**. 

May  30.  Accepted  J.  C.  Brown's  draft  at  30  days'  sight  on  C.  E.  Kelly  for  $500, 
favor  A.  S.  Davenport.  . 

May  30.  Received  of  W.  D,  Waller,  cash  for  his  note  of  the  30th  ult.  and  inter- 
est.    Face  of  note,  $75;  interest  at  5%,  31^.     Total  $75.31. 

May- 30.  Sold  to  A.  J.  Bailey,  4  chests  Y.  H.  Tea,  180  ft),  at  50^,  $90;  150  bu. 
Potatoes  at  $1.10,  $105;  10  bbl.  Minnesota  Flour  at  $7.25,  $72.50.  Total  $327.50. 
Received  in  payment,  cash,  $163.75;  balance  on  account,  $***.**. 

May  30.  Discounted  at  Union  National  Bank,  J.  R.  Rumsey's  note  of  the  23d 
inst.  Face  of  note,  $446.85;  discount  off  at  6%,  $1.71.  Net  proceeds  received  in 
cash,  $*****. 

May  30.  Paid  cash  for  our  note,  favor  W.  H.  Southard,  of  the  3d  inst.,  and 
interest  to  date.     Face  of  note,  $500;  interest  at  5%,  $1.88.     Total  $501.88. 

Business  Papers  required  for  May: 

Bill  to  J.  T.  Armour,  Springfield,   111.,  May  18. 

Note  of  J.  R.  Rumsey,  Indianapolis,  May  23,  payable  at  his  office. 

Acceptance  favor  A.  vS.  Davenport  of  May  30. 


76 


MODERN  ACCOUNTANT 


EXERCISE   XXXV 

To  the  Stiidoit:  Post  the  Journal  entries  for  May  under  Ledger  headings  used  in 
April.  Do  not  skip  any  space  on  either  side  of  an  account.  Place  first  May  entry 
next  to  last  April  entry.  When  you  have  finished  posting,  take  a  trial  balance, 
including  the  balances  brought  down.       Test    your  trial  balance  with  the  following 

RESULTS 

Cash  on  hand $1939.07 

Bills  Receivable  on  hand 287,43 

Bills  Payable  unpaid 3229.17 

Personal  Accounts  owing  us 1604.80 

Personal  Accounts  we  owe 1150,53 

Copy  the  following 

INVENTORY  OF  PROPERTY  UNSOLD,  MAY  31,   19- 


90  bbl.  Minnesota  Flour, 
25  bu.  Potatoes, 

40  boxes  German  Soap,  1600  lb, 
5  chests  Young  Hyson  Tea,  2251b, 
12  sacks  Rio  Coffee,  1680  lb, 
20  boxes  Sperm  Candles,  993  lb, 
50  bbl.  Winter  Apples, 


@  $6.00 

@  .75 

@  ,07 

@  .40 

@  .10 

@  .25 

@  2.50 


5  shares  Illinois  Central  R.  R.  Stock,  valued  at  $110, 

Store  and  Lot,  No.  264  River  Street, 

Fixtures,  worth, 
4  months'  rent,  paid  in  advance,  at  $75, 


540 

00 

18 

75 

112 

00 

90 

00 

168 

00 

248 

25 

125 

00 

EXERCISE   XXXVI 

To  the  Student:     You  will  now  close  the  Ledger  accounts. 
First,  Credit  up  inventories. 

Second,  Close  all  representative  accounts  and  bring  down  the  inventory,  if  any. 
Third,  Close  one-half  of  Loss  and  Gain  balance  to  each  partner.     These  entries 
will  go  on  the  debit  side  in  red  ink  thus: 

GAIN  AND  LOSS 


May 


31 
31 


C.  E.  Kelly, 
W.  L.  Parsons 


When  credited  with  proper  share  of  the  Loss  and  Gain  account,  the  Proprietors' 
accounts  should  show  the  following  balances: 

C.  E.  Kelly's  net  capital  at  closing,  $3755.20. 

W.  L.  Parsons'  net  capital  at  closing,  $3873.40,  when  using  text  prices. 

Then  transfer  to  the  credit  of  these  accounts  and  balance  them.  Close  remain- 
ing accounts  to  balance  and  bring  down  the  balances.  Do  not  close  real  accounts 
having  but  a  single  debit  or  credit  item. 

Fourth,  Make  out  a  Statement.  Show  each  partner's  net  gain  or  net  loss  and 
capital  at  closing,  separately.  Group  personal  accounts  in  your  statement  under 
"Personal  Accounts  Receivable"  and  "Personal  Accounts  Payable." 


RESULTS 
PRICE  LISTS  FOR  APRIL  AND  MAY 


77 


If  for  the  sake  of  drills  in  accuracy,  or  other  reason,  it  should  be  desired  that  the 
student  perform  the  calculations  in  each  transaction,  in  the  two  previous  months,  the 
following  price  lists  are  given  for  the  purpose,  together  with  the  results  under  each 
price  list: 


Articles. 


Boston  Crackers 
Cider  Vinegar. . . 
German  Soap.  . . 

Inch  Rope  

Minn.  Flour 

N. O.  Sugar 

N.  Y.  Salt 

Potatoes  

Rio  Coffee 

Sperm  Candles. . 
Winter  Apples  . . 
Y.  H.  Tea 


Buying  Prices  for  April  and  May, 


List  1. 


$L80  bx. 
.25  gal. 
.08  lb. 
.04  lb. 
6.00  bbl. 
22.00  bbl. 
2.75  bbl. 
.90  bu. 
13.00  sk. 
.25  lb. 
2.35  bbl. 
.40  lb. 


$1.90 

.28 

.09 

.05 

6.25 

24.00 

2.40 

.80 

14.00 

.27 

2.40 

.42 


$L75 

.24 

.10 

.04 

6.40 

28.00 

2.50 

.70 

15.00 

.28 

2.50 

.45 


$L60 

.23 

.09 

.04^ 

6.10 

25.00 

2.60 

.75 

14.50 

.30 

2.35 

.42 


$L70 

.20 

.08 

.05 

6.15 

2G.00 

2.75 

.85 

14.25 

.29 

2.40 

.50 


Selling  Prices  for  April  and  May. 


List  1. 

2 

3 

4 

$1.85    bx. 

$2.00 

$1.85 

$L80 

.30    gal. 

.30 

.30 

.25 

.08^-  lb. 

.09^ 

.10 

.09' 

.041  lb. 

.06 

.06 

.05 

6.50    bbl. 

6.40 

6.75 

6.50 

24.00    bbl. 

25.00 

30.00 

28.00 

3.00    bbl. 

2.60 

3.00 

3.10 

1.10    bu. 

.95 

1.00 

1.10 

15.00    sk. 

15.00 

16.00 

16.00 

.30    lb. 

.32 

.34 

.35 

2.75    bbl. 

2.75 

2.80 

3.00 

.50    lb. 

.45 

.50 

.45 

$1.90 

.24 

.09 

.05^ 

6.60 

30.00 

3.25 

1.15 

16.00 

35 

3.00 

.60 


Before  beginning  the  work  of  this  set,  the  student  should  copy  upon  a  small  sheet 
of  paper  the  names  of  the  articles  in  the  above  Price  List,  together  with  the  buying 
and  selling  prices  of  same,  and  use  that  sheet  as  his  price  list.  This  will  avoid  con- 
fusion, and  perhaps  error,  in  selecting  the  price  from  the  above  list  each  time. 

Compute  the  value  of  the  inventories  of  merchandise  at  the  buying  price  under 
each  list,  using  the  quantities  as  given  at  the  close  of  the  month's  transactions. 
Property  other  than  merchandise  will  remain  of  the  same  value  as  given  under  the 
inventory  at  the  close  of  the  transactions. 

RESTJLTS  FOR  APRIL 


Cash  on  hand 

Bills  Receivable 

Bills  Payable 

Accounts  Receivable  . . . 

Accounts  Payable 

C.  E.  Kelly's  net  capital 


List  1. 


$2424.89 

236.05 

350.00 

52.50 

11.26 

4199.18 


$2420.22 

22L73 

350.00 

40.50 

53.26 

4145.19 


$2434.42 

238.57 

350.00 

58.50 

83.03 

4189.71 


$2472.79 

222.23 

350.00 

62.50 

19.38 

4251.64 


$2455. 70 

257.31 

350.00 

71.60 

76.88 
4258.73 


RESULTS  FOR  MAY 


List  1. 

2 

3 

4 

5 

Cash  on  hand 

Bills  Receivable 

$1873.09 
261.05 
3229.17 
1637.05 
1202.76 
3695.35 
3821.16 

$1918.16 
246.73 
3229.17 
1587.12 
1415.98 
3589.58 
3769.39 

$2012.10 
263.57 
3229.17 
1687.69 
1636.11 
3637 . 79 
3773.08 

$2013.86 
247.23 
3229.17 
1692.85 
1395.18 
3763.44 
3836.80 

$2000.44 
282.31 

Bills  Payable 

3229.17 

Accounts  Receivable 

1745.95 

Accounts  Payable    

1420.32 

C.  E.  Kelly's  net  capital 

3791.08 

W.  L.  Parsons'  net  capital 

3857.35 

78  MODERN  ACCOUNTANT 

EXERCISE    XXXVII 

MERCHANDISE   ACCOUNT 

The  Merchandise  account  is  an  account  that  when  active  is  both  a  real  and  a 
representative  account.  When  closed,  it  becomes  a  real  account,  the  representa- 
tive element  being  closed  to  Loss  and  Gain. 

The  object  of  the  Merchandise  account  is  to  show  the  gross  profit  on  trading. 
In  order  to  show  the  true  gross  profit  and  correct  per  cent,  of  gain  or  loss  for  a 
definite  period,  true  net  cost  must  appear  on  one  side  and  true  net  sales  on  the  other 
side. 

Transactions  affectinf^  Merchandise  may  be  classified  by  the  use  of  the  following 
Ledger  accounts  as  subordinate  merchandise  accounts: 

1.  Stock  of  Goods  Acct. 

2.  Mdse.  Purchases. 

3.  Mdse.  Sales. 

4.  Mdse.  Purchases  Returned. 

5.  Mdse.  Scales  Returned. 

Rebates  are  included  either  in  Purchases  Returned  or  Sales  Returned. 
In  case  of  a  Ledger  having  such  accounts,  the  following  is  the 

ORDER  OF  CLOSING 

Open  a  "General  Merchandise  Account." 

1.  Close  "Stock  of  Goods  Acct."  to  new  account. 

2.  Close  "Mdse.  Pur.  Ret'd."  to  "Mdse.  Pur." 

3.  Close  "Mdse.  Pur."  to  "Gen.  Mdse.  Acct." 

4.  Close  "Mdse.  Sales  Ret'd"  to  "Mdse.  Sales." 

5.  Close  "Mdse.  Sales"  to  "Gen.  Mdse.  Acct." 

There  may  be  several  other  Subordinate  accounts  to  be  closed  into  "Mdse.  Pur." 
account,  such  as  "  In-Freight,"  "  Duties,"  "  Rebates,"  "  Allowances."  In-Freight  and 
Duties  increase  the  cost.  Rebates  and  Allowances  decrease  the  cost.  Rebates  and 
Allowances  on  sales,  made  by  us,  decrease  the  sales. 

In  solving  the  following  examples,  the  Skeleton  Ledger  should  be  used. 

Example  1. — The  total  cost  of  merchandise  is  $75000.  The  total  sales  are  $110000.  What  is 
the  profit  and  the  per  ceujt.  of  profit? 

Example  2. — The  value  of  the  stock  of  goods  on  hand  at  beginning  of  the  year  was  $30000. 
The  total  purchases  during  the  year  was  $75000.  The  total  sales  $120000,  and  there  is  a  stock  of 
goods  on  hand  at  the  end  of  the  j^ear  costing  $40000.  What  is  the  profit  and  what  is  the  per  cent,  of 
profit? 

Example  3. — The  value  of  stock  of  goods  Jan.  1,  1904,  was  $35000.  Purchases  during  j'ear 
amount  to  -$121000.  Sales,  $205000.  In-freight,  $780.  Duties,  $8G00.  Goods  that  we  returned 
invoiced  at  $2100.  Goods  returned  to  us  invoiced  at  $1600.  Goods  on  hand  Jan.  1,  1905,  invoiced 
at  $24000.     What  is  the  profit  and  what  is  the  per  cent,  of  profit? 

Example  4.— A  has  a  stock  of  goods  on  hand  that  are  marked  for  sale  amounting  to  $3(5000. 
He  buys  during  the  year  goods  invoiced  at  $84000.  His  sales  amount  to  $15(5000.  Freight  on  goods 
bought  was  $960.  Duties,  $3100.  Goods  returned  by  us,  $S00.  Goods  returned  to  us,  $1800.  The 
goods  at  the  beginning  of  the  year  had  been  advanced  25%  in  marking,  10%  of  freight  and  duties 
is  apportioned  to  goods  on  hand  at  the  end  of  the  year  invoiced  to  us  at  $24000.  Find  the  profit 
on  merchandise  and  the  per  cent,  of  gain. 


THE   BALANCE   SHEET 


EXERCISE  XXXVIII 

THE  BALANCE   SHEET 

The  Balance  Sheet  is  a  condensed  statement  designed  to  show  at  a  glance  all 
facts  in  general  relating  to  the  financial  condition  of  the  business.  It  is  in  reality 
an  epitome  of  the  Ledger.  Its  facts  and  figures  are  taken  from  the  various  Ledger 
accounts,  and  its  results  must  correspond  with  the  closing  entries  in  the  Profit  and 
Loss  and  Proprietor's  accounts  in  the  Ledger. 

In  the  first  two  columns  will  be  placed  a  Trial  Balance  of  the  Ledger  accounts. 
The  Trial  Balance  may  be  one  of  total  debits  and  credits,  or  it  may  contain  the 
mere  debit  or  credit  balance  only.  It  is  customary  to  divide  the  personal  account 
balances  into  two  classes — payable  and  receivable,  respectively — and  enter  them 
in  the  Balance  Sheet  or  Statement.  This  is  necessary  in  a  large  business.  The 
Balance  Sheet  shows  the  condition  of  the  business  in  final  results.  A  list  of  the 
accounts  receivable  and  payable  may  be  made  out  to  accompany  the  Balance  Sheet. 
It  is  known  as  a  Schedule.  Bills  Receivable  and  Bills  Payable  also  may  be  scheduled. 
Then  begin  with  the  first  account  after  the  proprietor's  or  partners'  accounts  and 
extend  the  differences  between  the  debit  and  credit  amounts  into  the  columns  to  the 
right.  If  a  real  account,  extend  the  difference  into  the  column  of  Resources  or 
Liabilities.  If  a  representative  account,  extend  the  inventory  into  the  Resource 
column  and  the  difference  into  the  Loss  and  Gain  columns.  The  difference  between 
the  Loss  and  Gain  columns  will  show  the  net  gain  or  net  loss,  and  this  added  to,  or 
subtracted  from,  the  proprietor's  net  investment  will  give  his  net  capital  at  closing, 
which  is  a  liability  to  the  business  and  hence  must  be  extended  into  the  Liability 
column.  If  no  error  has  been  made  the  net  capital  of  the  proprietor  or  partners 
when  extended  into  the  Resource  and  Liability  columns  will  cause  them  to  balance, 
thus  proving  the  accuracy  of  the  work. 

The  Balance  Sheet  may  be  made  out  from  the  Trial  Balance  before  the  Ledger  is 
closed,  and  by  some  bookkeepers  this  method  is  preferable  to  that  of  making  out  the 
Balance  Sheet  after  the  Ledger  is  closed,  since  it  is  an  aid  in  closing  the  Ledger. 

Having  drawn  off  his  Balance  Sheet,  the  bookkeeper  lays  the  same  upon  the 
proprietor's  desk  for  his  inspection.  By  comparison  with  former  documents  of  the 
same  kind,  he  is  able  to  judge  accurately  of  the  progress  and  tendency  of  his  business. 

79 


80  MODERN  ACCOUNTANT 

The  following  is  a  Balance  Sheet  for  April.     You  may  make  out  a  similar  one  for 
May. 


\J^./ 


'f=. 


TRUL  BALANCE 


CR. 


LOSSES      &      GAINS 


RESOURCES  h.  LIABIUTIES 


^e^^ 


/73 


3 


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^At\J-6 


JiPC' 


<i^^. 


7^^/ 


^ 


y^^yzJ^^j^ 


^i' 


J/  7^^^/J/ 


^t?r6 


/^('7f 


r^ 


/o 


fC^'/^ 


/J3 


/2C 


^2^6^ 


<<i 


^ 


ZX^ 


<^" 


3^6 


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¥4^3  3 2^^^.^-^  3 2. 


:^ 


EXERCISES  IN  STATEMENTS 


81 


Make    out    a    Balance    Sheet   and    Statement    for  each  of  the    following    trial 
balances: 


M.  R.  Powers, 

200 

3220 

A.  W.  Leslie, 

100 

1500 

Merchandise, 

5508 

95 

2281 

80 

Cash, 

2437 

50 

1295 

82 

Bills  Receivable, 

1587 

50 

Bills  Payable, 

300 

714 

Johu  Jeuny, 

115 

Fixtures, 

500 

E.  J.  Hopson, 

250 

Johu  Davis  Sc  Co., 

200 

1357 

J.  O.  Bishop, 

437 

60 

275 

J.  W.  Hubbard  &  Co., 

325 

969 

Amos  Duncan, 

59 

Expense, 

100 

25 

Interest, 

1 

87 

Loss  and  Gain, 

15 

20 

***«■ 

62 

**** 

62 

Additional  information: 

Value  of  imsold  Merchandise,  $4125;  Fixtures  at  cost,  less  10%  ;  Items  on  hand 
charged  to  Expense  worth  $30. 

TRIAL  balance; 


W.  H.  Williams  Cap., 

12000 

Henry  White  Cap., 

15000 

Int.  &  Dis., 

96 

25 

142 

64 

Grain, 

29840 

33465 

Allowances  on  Mdse., 

325 

Merchandise, 

42160 

74 

62124 

36 

Expense, 

5240 

24 

Real  Estate, 

9300 

500 

Shipment  Account, 

10600 

11450 

75 

Personal  Accts.  Rec, 

20150 

6724 

Personal  Accts.  Pay, 

10740 

60 

12368 

Bills  Receivable, 

18600 

9090 

Bills  Payable, 

•  3500 

8000 

Cash, 

21336 

16 

Bank  Acct.  Overdraft, 

1000 

171888 

75 

171888 

75 

Additional  information: 

Close  Allowances  into  Merchandise  account.  Do  not  show  the  overdraft  on  the 
Balance  Sheet.  Value  of  unsold  Merchandise,  $7900;  value  of  unsold  Grain,  $8640; 
value  of  Shipments  not  reported,  $3600;  value  of  Real  Estate,  $9000;  value  of  items 
charged  to  Expense,  $1300.  Losses  and  Gains  to  be  shared  in  proportion  to 
investment. 


82 


MODERN  ACCOUNTANT 


EXERCISE    XXXIX 

The  following  examples  contain  trial  balances  and  are  to  be  written  up  in  either 
statement  or  balance  sheet  form: 
Example  1. 


W.  F.  Barnes  Capital, 

10000 

Cash, 

44000 

33000 

Mdse., 

52000 

63000 

Real  Estate, 

8000 

Expense, 

1260 

Interest  and  Discount, 

320 

264 

Bills  Receivable, 

12060 

5600 

Bills  Payable, 

3700 

9700 

Acct  Receivable, 

9350 

3356 

Acct.  Payable, 

4530 

10300 

Additional  information: 

Mdse.  unsold,  $6000;  Store,  House  and  Lot,  $7500;  Insurance  prepaid,  charged 
to  Expense,  $125. 

Prepare  a  statement  showing  net  gain  or  loss  and  proprietor's  present  worth. 

Example  2. — W.  J.  Smith  and  A.  B.  Jones  are  partners  sharing  gains  and  losses  equally.  Smith 
invested  $12000  and  Jones  $9000.  Other  debit  and  credit  items  are:  Cash  Dr.  $12600;  Cr.  $8760;  Bills 
Rec,  Dr.,  $7540;  Cr.,  $3120;  Bills  Pay.,  Dr.,  $5260;  Cr.,$7960;  Acct.  Rec,  Dr.,  $12370;  Cr.,  $4250;  Acct. 
Pay.,  Dr.,  $3720;  Cr.,  $8360;  Real  Estate,  Dr.,  $7100;  Cr.,  $1000;  Mdse.,  Dr.,  $54600;  Cr.,  $55700; 
Expense,  Dr.,  $1200;  Fixtures,  Dr.,  $800;      Smith's   drawings,   Dr.,  $3200;    Jones'  drawings,  $2300. 

Additional  information: 

Value  of  unsold  Merchandise,  $18600;  Real  Estate,  $6^)00;  Fixtures,  less  20% ; 
Expense,  $650;  Interest  on  Bills  Receivable  due  and  unpaid,  $300. 

Prepare  a  statement  showing  net  profit  and  partners'  present  worth. 
Example  3. 


Capital  Stock, 

Mdse., 

Accounts  Receivable, 

Accounts  Payable, 

Bills  Receivable, 

Bills  Payable, 

Cash, 

Stationery, 

Salaries, 

Advertising, 

Expense, 

Interest  and  Discount, 

Rent,  Insurance  and  Taxes, 


29867 

08 

37939 

75 

8907 

26 

37524 

49 

6411 

56 

2279 

72 

16523 

8204 

10 

1025 

18 

5871 

77 

34475 

65 

11882 

47 

11560 

62 

1148 

65 

3 

90 

772 

55 

1563 

64 

434 

83 

2 

741 

88 

412 

50 

108776 

25 

108776 

25 

Additional  information: 

Value  of  Merchandise  unsold,  $39240.50;  Stationery  on  hand,  $627.30.  There 
are  Salaries  earned  and  unpaid,  $116.75;  Interest  on  Bills  Payable  earned  to  date  and 
not  entered,  $516.22,  on  Bills  Receivable,  $49.64.  Rent  to  amount  of  $59.74  is  unpaid. 

Prepare  a  statement  showing  net  profit. 

Note. — The  following  transactions  covering  a  period  of  two  months  are  given  to  afford  drill 
on  journalizing.  Students  may  be  instructed  to  journalize  this  work  and  hand  it  in  as  they  have 
heretofore.  It  is  offered  more  with  an  idea  of  furnishing  work  for  oral  drill,  that  may  be  used  at  any 
time  and  when  students  are  at  any  point  in  the  text.  No  better  drill  is  afforded  than  when  the 
student  has  about  completed  the  text,  to  have  him  read  a  transaction  and  be  required  to  make  the 
entry  as  he  would  have  recorded  it  in  the  Jobbing  set,  then  as  it  would  be  entered  in  the  Columnar 
Journal  and  finally  as  in  the  Wholesale  set.  The  work  may  be  varied  as  the  teacher  sees  fit,  or 
entirely  omitted. 


SUPPLEMENTARY  EXERCISES 


Nov.  1,  19 — .  Bought  of  Simon  Morris,  on  my  note  at  30  days,  8  tons  Prairie 
Hay  at  $13,  $104;  80  bu.  Oats  at  33^,  $26.40;  240  bu.  Corn  at  45^-,  $108.  Total 
$238.40. 

Nov.  2.  Sold  J.  D.  Odell,  80  bbl.  Patent  Flour  at  $6,  $480;  25  bbl.  Prime  Pork 
at  $11,  $275.  Total  $755.  Received  in  payment,  cash,  $400;  his  note  at  00  days 
for  balance,  $355. 

Nov.  3.  Paid  J.  Manning  &  Co.  on  account,  my  draft  at  sight  on  C.  J.  Duncan 
for  $250. 

Nov.  4.  Sold  James  Hunter,  30  bbl.  Fish  at  $9,  $270;  20  doz.  Brooms  at  $1.25, 
$25;  10  bbl.  A  Sugar  at  $12.50,  $125.  Total  $420.  Received  in  payment  my  note, 
favor  Julius  Hudson,  $320;  interest  due  and  allowed  on  same,  $6.20;  cash  for  bal- 
ance, $93.80. 

Nov.  5.  Bought  of  Union  Trust  Co.  for  cash,  their  draft  on  New  York  at  1% 
premium,  and  remitted  same  to  C.  H.  Wadsworth,  New  York,  to  apply  on  account. 
Face  of  draft,  $800.     Premium  on  same  $S.     Total  $808. 

Nov.  6.  Sold  James  Hammond,  150  bu.  Spring  Wheat  at  40^,  $60;  500  bu. 
Yellow  Corn  at  30^',  $150.  Total  $210.  Received  in  payment  his  draft  at  5  days' 
sight  on  Samuel  D.  Barr  for  $100;  cash  for  balance,  $110. 

Nov.  6.  Bought  of  George  W.  Hubbard,  2  $500  U.  S.  Bonds  at  102^/^,  $****.**. 
Gave  in  payment,  cash,  $500;  Marvin  Andrew's  note,  C.  C.  Pickett's  favor,  $200; 
my  note  at  30  days  for  balance,  $***.**. 

Nov.  8.  Accepted  D.  B.  Cook's  draft  on  me  at  10  days'  sight,  favor  J.  C.  Skeen, 
$860. 

Nov.  9.  Received  of  Louis  Norton,  on  accotmt,  my  acceptance,  favor  Robert 
C.  Duncan,  $600. 

Nov.  11.  Sold  Henry  Otis  on  his  note  at  30  days,  my  draft  at  sight  on  Luther 
Johnson  for  $460. 

Nov.  12.  Paid  S.  S.  Hamilton  on  account,  my  draft  on  Henry  Warner  at  1% 
premium.     Face  of  draft,  $400;  premium,  $4.     Total  $404. 

Nov.  13.  Bought  of  Alex.  McCune,  an  invoice  of  Merchandise  amounting  to 
$3600.  Paid  him  for  same  my  bill  of  exchange  on  Henry  Seymour,  Boston,  at  2>^% 
discount.      Face  of  bill,  $2600;  discount  off,  $65;  cash  for  balance,  $1065. 

Nov.  15.  Shipped  J.  D.  Campbell,  Columbus,  Ohio,  for  sale  on  m}'  account  and 
risk,  200  bbl.  Greening  Apples  at  $2.50,  $500;  also,  per  his  order,  300  bu.  Early  Rose 
Potatoes,  bought  of  A.  C.  Burton  on  account  at  80^',  $240.     Total  $740. 

Nov.  16.  Redeemed  my  note,  favor  A.  W.  Lesley,  for  $630,  by  giving  Merchan- 
dise, $600;  discount  off,  $30. 

Nov.  18.  Received  of  John  D.  Stanton,  on  account,  his  draft  at  3  days'  sight 
on  W.  R.  Robinson,  and  by  him  accepted  for  $300. 

Nov.  19.  Paid  Geo.  B.  Lathrop  &  Co.,  cash  for  painting  and  calcimining  store, 
$75. 

83 


84  MODERN  ACCOUNTANT 

Nov.  20.  Received  of  J.  D.  Campbell,  Columbus,  Ohio,  an  account  sales  of 
Apples,  shipped  on  the  loth  inst.  Net  proceeds,  $825.60,  for  which  he  has  remitted 
his  note  at  30  days. 

Nov.  22.  Henry  Moore  having  failed,  has  paid  his  note  at  2h<l  on  the  dollar. 
Face  of  note,  $SCO.  Cash  received,  $215.  Paid-lawyer,  Nelson  Simonds,  cash  for 
making"  the  collection,  $5.     Lost  the  balance,  $645. 

Nov.  22.  Drew  on  John  D,  Brown,  Reading,  'Pa.,  at  15  days'  sight,  for  $280, 
wtiich  he  has  accepted  and  returned  to  me. 

Nov.  23.      Paid  cash  for  insurance  on  store  and  stock  of  goods,  $80. 

Nov.  24.  II.  W.  Wheeler  has  invested  the  following  resources:  Mdse.,  $1680; 
cash,  $340;  J.  Warner's  note  for  $430;  interest  accrued  on  note  to  date,  $8.50;  an 
account  against  J.  W.  King  for  $425,  considered  worth  $400. 

Nov.  25.  Sold  John  Smith  a  bill  of  goods  amounting  to  $268.50.  Received  in 
payment  James  Davis'  draft  on  me  (Smith's  favor)  for  $375.  Gave  a  30  day  note 
signed  by  J.  B.  Middleton,  favor  O.  W.  Potter,  for  $150;  interest  on  same  to  present 
date,  $1.20;  and  the  difference  is  settled  in  cash. 

Nov.  26.  Received  of  J.  C.  Martin  &  Co.,  on  account,  cash,  $200;  their  note  at 
30  days  for  $150.     Total  $350. 

Nov.  27.  Sold  Geo.  R.  Davis,  for  cash,  my  sight  draft  on  Eaton  &  Duncan, 
Detroit,  at  J^%    premium.       Face  of  draft,  $500;  premium,  $2.50.       Total  $502.50. 

Nov.  29.  Bought  of  John  B.  Russell,  20  bbl.  Flour  at  $7.50,  $150;  10  bbl. 
Mackerel  at  $9,  $90.  Total  $240.  Gave  in  payment  my  note  at  30  days,  with  inter- 
est at  6%  added  in  face  of  note.     Interest,  $1.20.     Face  of  note,  $241.20. 

Nov.  29.  Sold  Geo.  Duncan  a  bill  of  Merchandise  amounting  to  $500.  Received 
in  payment  S.  Dennis'  note,  Duncan's  favor,  dated  Oct.  20th,  at  60  days,  for  $360. 
Interest  allowed  on  same  to  date  at  6%,  $2.40.     Cash  for  balance. 

Nov.  30.  Bought  of  L.  G.  Gage,  for  cash,  at  ^  %  premium,  the  following 
draft,  which    I  have  indorsed  and  remitted  to  A.  J.  Downing,  Boston,  on  account: 


A^o.  628.  (  City  and  Siafc)  Nov.  jo,  ig — 

At  sight  pay  to  the  order  of 

{Student) $1200. 

Twelve  Hundred Dollars 

Value  recei^ied  and  charge  to  account  of 

To  H.  B.  Stanton,  Z.  f.  Gage. 

New  York. 


Nov.  30.     Make  Gage's  entry  for  the  above  draft. 

Dec.  1.  Bought  of  A.  L.  Merriman  &  Co. ,  Pittsburgh,  on  account,  bill  of  goods 
amounting  to  $186.40.     Paid  cash  for  freight  on  same,  $6.20.*     Total  $192.60. 

Dec.  2.  Received  of  J.  G.  Brown,  on  account,  his  draft  on  A.  M.  Hudson,  at 
1%  discount,  which  1  have  remitted  to  said  Hudson  to  apply  on  account.  Face  of 
draft,  $75. 

*Add  the  cost  of  freight  to  the  Mdse.,  as  it  increases  the  cost  of  the  Mdse. 


SUPPLEMENTARY  EXERCISES 


85 


Dec.  3.  Shipped  per  steamer  Chicago,  and  consigned  to  J.  H.  Carpenter, 
Buffalo,  to  be  sold  on  joint  account  of  himself  and  myself,  each  one-half,  1000  bbl. 
Apples  at  $2.50,  $2500;  200  bbl.  Minnesota  Flour  at  $5,  $1000.  Paid  cash  for  dray- 
age,  storage  and  insurance,  $30.     Total  $3530. 

Dec.  4.  Received  John  Dale's  note  at  30  days  for  one  month's  rent  of  house, 
No.  285  Warren  Avenue,  $40. 

Dec.  6.  Bought  of  L.  B.  Munson,  Merchandise  amounting  to  $350.  Gave  him 
my  draft  at  5  days'  sight  on  Wm.  J.  Anderson  for  $420,  at  1%  discount.  Received 
a  note  signed  by  Marshall  Field,  favor  of  Potter  Palmer,  and  indorsed  by  Munson, 
for  $120,   on  which  he  has  allowed  a  discount  of  1%.       The  balance  is  paid  in   caslf. 

Dec.  7.  Received  of  Mason  &  Bower,  on  account,  cash,  $200;  their  note  at  10 
days  for  $200;  their  draft  on  A.  J.  Carnes  for  $125. 

Dec.  8.  Sold  William  C.  Mason,  for  cash,  a  bill  of  goods  amounting  to  $125, 
but  by  an  error  he  has  paid  me  $135. 

Dec.  9.  Sold  J.  H.  Goldsmith,  Atlanta,  Ga.,  20  bbl.  W.  W.  Flour  at  $6,  $120; 
5  chests  Y.  H.  Tea,  5201b,  at  50^,  $260;  50  bbl.  Pork  at  $12.50,  $625.  Total  $1005. 
Received  in  payment  his  check  on  Union  National  Bank  of  Atlanta,  $625;  A.  W. 
Harrison's  draft  dated  St.  Louis,  Dec.  4,  at  10  days'  sight  on  me,  accepted  Dec. 
7th,  Goldsmith's  favor,  for  balance,  $380. 

Dec.  10.  Bought  of  D.  D.  Morse  for  cash,  Horse,  Harness  and  Delivery  Wagon 
for  use  of  store,  $860.  Debit  Horse  and  Wagon  account. 

Dec.  11.  Received  of  J.  H.  Carpenter,  Buffalo,  an  account  sales  of  Produce 
shipped  him  on  the  8d  inst.  on  joint  account.  My  one-half  net  proceeds,  $1842.70, 
he  owes  me  on  account. 

Dec.  13.     Paid  cash  for  Shoeing  Horse  and  Repairing  Wagoa,  $3.50. 

Dec.  14.  Bought  of  P.  D.  Armour  &  Co.,  50  bbl.  Pork  at  $11,  $550.  Gave  them 
my  draft  on  Pratt  &  Walker  at  i^^  %  premium.  Face  of  draft,  $580.  Premium, 
$1.45.     Balance  due  me  on  account. 

Dec.  15.  Bought  of  Harwood  &  Co.,  Milwaukee,  50  bbl.  Cranberries  at  $5,  $250. 
Paid  them  my  note  at  80  days  for  $100;  my  sight  draft  on  Andrew  Hosmer  at  1% 
discount  for  $100;  cash  for  balance,  $51.      Discount  on  above  draft  (my  loss),  $1. 

Dec.  16.  Sold  John  Smith,  for  cash,  2  tons  Coal  from  my  winter's  supply  of 
fuel,  $18. 

Dec.  17.  Refunded  to  William  C.  Mason,  in  cash,  the  amount  of  his  over-pay- 
ment on  the  8th  inst.,  $10. 

Dec.  18.  The  following  draft  has  this  day  been  presented  to  me,  and  I  have 
paid  same  in  cash  : 


Louisville y  Ky.,  Dec.  /j,  igo- 


Ai  sight  pay  to  the  order  of 

L.  H.  Townsend. 

One  Hundred  Fifty 

Value  received  and  charge  to  account  of 
To  {Student) 

(  Your  City  and  State.) 


...Sjso. 
.Dollars. 


Waterbury  (3^  Holmes. 


DISCOUNTS 


TRADE    DISCOUNTS 

A  Trade  Discount  is  an  allowance  of  a  certain  per  cent,  from  the  list  or  catalogue 
price.  Manufacturers  and  dealers  usually  issue  their  catalogues  or  price  lists 
annually.  The  price  quoted  in  such  catalogue  is  called  the  List  Price,  and  discounts 
are  made  from  this  according  to  the  demands  of  the  market.  These  discounts  are 
called  Trade  Discounts^  and  are  estimated  at  a  certain  per  cent.  There  may  be  two  or 
more  of  such  discounts  upon  the  same  bill,  in  which  case  the  second  is  computed 
upon  what  remains  after  deducting  the  first.  Thus  a  bill  of  goods  is  sold  with  an 
allowance  of  20,  10  and  5%  off.  In  this  case  the  20%  is  first  deducted  from  the 
amount  of  the  bill,  then  10%  of  the  remainder  is  deducted  from  the  remainder,  after 
which  5%  of  what  still  remains  is  deducted  therefrom,  and  the  remainder  is  called 
the  net  amount. 

In  the  following  Invoice  a  Trade  Discount  of  20  and  5%  has  been  allowed: 


9;/. 

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WHOLESALE     HARDWARE 

TERMS    30    DAYS    ""   ^*  '"^^"'^•"^'^ 
(  CASH  IN  10  DAYS 

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DISCOUNTS  87 

CASH    DISCOUNT 

Goods  are  sold  for  Cash  or  on  credit.  If  sold  on  credit,  the  bills  are  due  and  pay- 
able at  a  stated  time,  usually  monthly.  If  paid  before  due,  an  allowance  is  usually 
made  for  such  payment,  and  this  is  called  a  Cash  Discount.  Merchants  have  printed 
upon  their  bill  heads  the  terms  under  which  payment  may  be  made,  and  the  cus- 
tomer is  given  the  alternative  of  paying  the  bill  before  due  and  receiving  the  dis- 
count or  withholding  payment  until  the  expiration  of  the  term  of  credit.  Thus,  jo 
days,  3^0  off  lo  days,  indicates  that  the  customer  may  pay  in  30  days,  or  by  paying 
in  10  days  he  will  receive  an  allowance  of  3%  from  the  bill.  This  allowance  is  the 
Cash  Discowit.  The  amount  remaining  after  all  discounts  and  deductions  have  been 
made  is  the  Net  Amottnt  of  the  bill. 

In  entering  a  sale  of  goods,  the  Trade  Discounts  are  taken  off  at  the  time  the  entry 
is  made,  but  the  Cash  Discount  is  not  taken  off  U7\til  the  bill  is  paid. 

In  the  Invoice  on  preceding  page  a  trade  discount  of  20  and  5%  has  been  allowed, 
and  in  addition  to  this  a  Cash  Discount  of  2%  is  deducted  for  payment  before  the  ex- 
piration of  the  10  days  allowed.  The  net  amount  after  deducting  the  Cash  Discount 
of  2%  is  $663.39. 

Desiring  to  pay  this  invoice  before  the  expiration  of  the  ten  days  and  thus  secure 
the  Cash  Discount,  James  K.  Spencer  purchases  ^  Bank  Draft  for  the  net  amount 
($663.39),  payable  to  himself  or  order. 

This  form  of  remittance  is  most  generally  used  by  business  men,  as  convenient, 
safe  and  economical.  The  bank  may  charge  a  slight  fee,  called  Exchange,  for  issu- 
ing such  a  Draft. 

FORM   OF  BANK  DRAFT 


FIRST  NATIONAL  BANK 

No Chicago,      c^/j'^^^b/p.  .  1 9. 


Pay  to  the  order  of        1/^,^7^  ^  ^  r^\^&Y^ $^^^A^ 


x:>L:<:^^^r:A47^^^^^-x:^^^  Doflars 


To 


Cashier 


The  advantage  in  having  the  Draft  written  payable  to  James  K.  Spencer  instead  of 
being  payable  directly  to  the  firm  who  is  to  receive  the  money,  is  to  show  that  the 
paper  has  passed  through  the  hands  of  James  K.  Spencer,  or,  in  other  words,  that  he  has 
paid  his  debt  to  H.  B.  Duncan  &  Co.  by  means  of  this  draft. 
Spencer  now  indorses  the  draft  as  follows: 

Pay  to  After  indorsement  the  draft  is  enclosed   in    a  properly 

H.  B.  Duncan  &  Co.         written  letter,  a  form  of  which  is  given  on  the  next  page,  and 

or  order.  forwarded  to  the  firm  of  Duncan  &  Co. 

James  K.  Spencer. 


88  MODERN    ACCOUNTANT 


OFFICE     OF 


James  B..  Spencer 

DEALER      IN 

^tottcs  anD  ^arDtoace 


^^^'^-^-^(I^e^i^^C^^^^^-.^-c^^-^^<^'t^^ki^''^^^-.^'^^^ 


In  enclosing  a  Draft,  Check  or  other  document  for  remittance  by  mail,  place  the 
draft  across  the  upper  half  of  the  letter  sheet  (even  better,  pin  it  to  the  letter  sheet), 
then  fold  the  letter  as  if  the  Draft  were  not  there. 


REVIEW    EXERCISES  89 

aUESTIONS  FOR  REVIEW 

1,  What  is  an  Account?  2.  Define  the  Ledger.  3.  What  is  Posting?  4.  What  is  a  Ledger 
Heading?  5.  What  must  the  Ledger  Titles  or  Headings  correspond  with?  6.  How  many  sides  has 
every  account,  and  what  are  they?  7.  How  is  an  account  debited?  8.  How  is  an  account  credited? 
9.  What  is  the  Title  Line?  10.  Define  the  different  columns  in  an  account.  IL  What  account  should 
appear  first  in  the  Ledger,  and  why?  12.  How  should  Ledger  Headings  be  written?  13.  What  is  the 
rule  in  reference  to  abbreviating  Ledger  Headings?  14.  What  title  is  used  by  some  bookkeepers 
instead  of  the  proprietor's  name?  15.  Where  are  debit  items  in  the  journal  posted?  16.  Are 
explanations  written  in  the  item  column  in  the  Ledger,  when  posting  delnt  items?  17.  Where 
are  credit  items  in  the  Journal  posted?  18.  Are  explanations  written  in  the  item  column  in  the 
Ledger  when  posting  credit  items?  19.  What  is  post-marking,  and  what  does  it  consist  in?  20.  What 
is  the  object  of  a  Trial  Balance?  21.  How  is  a  Trial  Balance  made?  22.  What  does  the  Trial 
Balance  prove?  23.  Does  the  Trial  Balance  prove  the  absolute  correctness  of  the  Ledger,  and  why? 
24.  What  method  must  be  pursued  in  case  the  Ledger  is  found  to  be  out  of  balance?  25.  What  is 
"forcing  a  trial,"  and  what  can  be  said  of  the  practice?  2(5.  Should  the  Trial  Balance  be  preserved; 
wh}'  and  how?  27.  What  do  we  understand  by  ''closing  the  Ledger?"  28.  What  three  things  will 
the  Ledger  exhibit  when  closed?  29.  How  often  is  it  customary  to  close  books  in  business?  30.  How 
are  accounts  classified  as  to  their  nature?  31.  Define  a  Real  account  and  give  examples. 
32.  Define  a  Representative  account  and  give  examples.  33.  Why  are  Representative  accounts  so 
called?  34.  How  are  Real  accounts  closed?  35.  How  are  Representative  accounts  closed? 
36.  What  is  to  be  done  with  the  inventories  of  property  on  hand,  in  the  process  of  closing  Represen- 
tative accounts?  37.  What  does  a  red  ink  entry  upon  the  Ledger  signify?  38.  In  transferring  entries 
why  do  they  change  sides?  39.  What  does  the  debit  side  of  Cash  account  show?  40.  What  does  the 
credit  side  show?  41.  What  does  the  difference  show?  42.  On  which  side  will  the  closing  entry 
always  appear;  why?  43.  After  closing  a  real  account  why  is  the  balance  brought  down  immediately 
beneath  the  rulings  on  the  opposite  side?  44.  What  does  the  debit  side  of  Bills  Receivable  account 
show?  45.  What  does  the  credit  side  show?  46.  On  which  side  is  the  first  entry  always  made;  why? 
47.  How  is  this  account  closed?  48.  What  does  the  credit  side  of  Bills  Payable  account  show? 
49.  What  does  the  debit  side  show?  50.  On  which  side  is  the  first  entry  always  made;  why? 
51.  How  is  this  account  closed?  52.  What  does  the  debit  side  of  a  personal  account  show? 
53.  What  does  the  credit  side  show?  54.  What  does  the  difference  show?  55.  How  is  the  account 
closed?  56.  What  does  the  debit  side  of  Merchandise  account  show?  57.  What  does  the  credit  side 
show?  58.  Why  is  the  inventory  always  entered  upon  the  credit  side?  .59.  After  entering  the 
inventory  upon  the  credit  side,  what  does  the  difference  between  the  two  sides  show?  60.  Where  is 
this  difference  transferred?  61.  What  does  the  debit  side  of  Expense  show?  62.  What  does  the 
credit  side  show?  63.  What  does  the  difference  show?  64.  What  does  the  debit  side  of  Loss  and 
Gain  account  show?  65.  What  does  the  credit  side  show?  66.  What  does  the  difference  show? 
67.  How  is  this  difference  entered  in  the  Loss  and  Gain  account?  68.  Where  is  this  carried? 
69.  What  does  the  credit  side  of  the  proprietor's  account  show?  70.  What  does  the  debit  side  show? 
71.  What  does  the  difference  show,  and  how  is  it  entered?  72.  What  is  a  Statement,  and  what  is  it 
intended  to  show?  73.  Where  are  the  facts  to  be  found  from  which  the  Statement  is  made  up? 
74.  What  can  you  say  as  to  the  importance  of  neat  and  accurate  ruling,  and  how  may  this  be 
secured?  75.  What  is  a  Balance  Sheet?  76.  Wherein  does  a  Balance  Sheet  differ  from  a  statement 
of  Resources  and  Liabilities?  77.  What  advantage,  if  any,  has  a  Balance  Sheet  over  a  Statement? 
78.  From  what  column  or  columns  in  the  Balance  Sheet  would  you  determine  whether  the  business 
had  been  prosperous  or  adverse?  79.  From  what  source  would  you  ascertain  the  value  of  your 
business  in  case  you  were  about  to  sell?  80.  In  case  the  proprietor  were  insolvent,  what  column  in 
the  Balance  Sheet  would  exhibit  the  amount  of  such  insolvency?  81.  What  are  Trade  Discounts? 
82.  Define  Cash  Discounts.  83.  When  are  Trade  Discounts  taken  off  ?  84.  When  are  Cash  Discounts 
taken  off?  85.  Suppose  Trade  Discounts  of  50^,  30$^  and  20^*were  taken  off,  would  anything  be  left, 
and  if  so,  how  much  on  a  bill  of  $100?  86.  Explain  why  this  result  is  correct.  87.  How  are  remit- 
tances usually  made  in  settlement  of  bills  in  business?  88.  What  is  the  object  of  making  the  bank 
draft  payable  to  yourself  and  then  indorsing  it  over  to  the  person  or  firm  to  whom  the  invoice  is 
payable? 


90 


MODERN    ACCOUNTANT 


CASH    BOOK 


EXERCISE    XL 

The  Cash  Book  contains  a  record  of  receipts  and  expenditures  in  detail,  from 
which  the  balance  may  at  any  particular  time  be  determined.  It  is  one  of  the  prin- 
cipal books  of  accounts  and  is  frequently  referred  to  by  the  business  man.  It  differs 
in  no  material  points  from  the  cash  account  as  kept  in  the  Ledger,  except  that  more 
space  is  generally  used  and  that  the  receipts  and  expenditures  may  be  entered  in  the 
Cash  Book  at  the  time  they  occur  and  the  balance  be  determined  at  any  particular 
moment,  whereas,  if  all  the  entries  are  first  put  in  the  Journal  and  then  posted,  the 
ready  information  is  not  so  easily  obtainable. 

CASH 

Bate        Folio  Credit    Items  Explanations  '  Items  Total 


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The  Cash  Book  usually  occupies  two  pages,  the  left-hand  page  (called  Debit  side) 
being  used  to  record  the  receipts  and  the  right-hand  page  (called  Credit  side)  the 
payments.  The  Cash  Book  is  balanced  and  ruled  up  the  same  as  the  cash  account  in 
the  Ledger.  The  ruling  for  the  simplest  Cash  Book  is  the  same  as  that  used  for  a 
Journal.     The  object  of  each  column  is  fully  explained  in  the  form  given. 

When  it  becomes  necessary,  one  transaction  may  be  entered,  one  part  on  each 
side  of  the  Cash  Book,  as  in  the  transaction  of  the  9th.  This  becomes  necessary  in 
this  case  as  the  note  must  be  entered  at  the  face  value,  and  the  entry  is  first  made  on 
the  left-hand  page,  as  we  are  in  receipt  of  cash.  We  pay  the  charges  to  the  banker 
at  the  time  of  discount  which  lessen  the  amount  received,  and  this  payment  is  recorded 
on  the  right-hand  page.  The  difference  between  these  two  items  is  the  amount  of 
cash  actually  received. 


CASH    BOOK 


91 


It  is  customary  in  business  to  close  the  Cash  Book  at  the  end  of  eacn  business 
day,  or  at  least  to  prove  its  correctness. 

Trace  the  following  transactions  through  the  Cash  Book  given  as  a  model : 

Example  1. — Jan.  1,  19—,  F.  W.  C.  Holtkamp  invested  cash  in  business,  $1000.  Jan.  2,  He 
paid  one  month's  rent  of  store,  $75.  Jan.  3,  Received  from  James  Smith,  cash  for  Mdse.,  $175.50. 
Jan. 5,  Paid  clerk  for  week's  salary,  $12.50,  Jan.  6,  F.  D.  Naegele  paid  cash  on  account,  $150.  Jan. 
7,  Paid  drayage  on  Mdse.,  $3.(50.  Jan.  9,  Discounted  D.  C.  Meyer's  note  at  bank,  face  of  note,  $250; 
discount  deducted  by  banker,  $2.75;  received  the  balance  in  cash.  Jan.  11,  Paid  J.  P.  Shaw  on  ac- 
count, $75.     Jan.  14,  Paid.  J.  F.  Sarley  for  safe  for  office  use,  $125. 

You  may  copy  the  Cash  Book  as  given  for  Example  1,  on  trial  paper,  using  pages 
2  and  3.     Always  have  receipts  and  payments  on  corresponding  opposite  pages. 


BOOK 


Date  Folio 


Explanations 


Items  Total 


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If  the  entries  on  the  receiving  side  were  each  journalized  they  would  be  as  follows: 


Jan. 

1 

Cash, 

F.  W.  C.  Holtkamp, 

1000 

1000 

3 

Cash, 

Mdse., 

175 

50 

175 

50 

6 

Cash, 

F.  D.  Naegele, 

150 

150 

9 

Cash, 

Bills  Rec, 

250 

250 

By  eliminating  the  debit,  which  in  each  case  is  cash,  and  writing  it  as  a  heading, 
time  and  space  will  be  gained.     Each  Cash  Book  entry  contains  a  debit  and  credit. 


*This  line  as  well  as  all  rulings  should  be  in  red  ink. 


92 


Jan. 


2 

5 

7 

9 

11 

14 


Expense, 

Expense, 

Mdse., 

Discount, 

J.  P.  Shaw, 

Fixtures, 


MODERN  ACCOUNTANT 
PAYMENTS 


Cash, 
Cash, 
Cash, 
Cash, 
Cash, 
Cash, 


75 

75 

12 

50 

12 

3 

60 

3 

2 

75 

2 

75 

75 

125 

125 

50 
60 

75 


If  but  one  entry  for  each  side  be  made,  the  following  Journal  entry  illustrates 
the  debit  and  credit  items: 


Cash, 


RECEIPTS 


F.  W.  C.  Holtkamp, 

Mdse., 

F.  D.  Naegele, 

Bills  Rec, 


1575 


50 


1000 
175 
150 

250 


50 


PAYMENTS 


Expense, 

Expense, 

Mdse., 

Discount, 

J.  P.  Shaw, 

Fixtures, 


Cash, 


75 

12 

50 

3 

60 

2 

75 

75 

125 

293 


85 


Write  up  the  Cash  Book  for  the  following  transactions,  placing  it  just  below  the 
form  copied,  using  the  balance  brought  down : 

Example  2. — Jan.  16,  19—,  Balance  of  cash  on  hand,  $1281.65.  Jan.  18,  Received  from  A.  B. 
Jones,  on  account,  $96.40.  Jan.  19,  Paid  our  note  favor  E.  L.  Coe,  due  to-day,  $200,  and  interest  on 
same,  $1.47  (two  items).  Jan.  20,  Sold  O.  E.  Grant  bill  of  goods  for  cash,  $195.64.  Jan.  20,  Paid 
clerk  hire,  $16.50.  Jan.  22,  Received  for  petty  cash  sales,  $19.40.  Jan.  23,  Paid  sundry  items  of 
expense,  $4.56.  Jan.  23,  Received  from  A.  B.  Jones,  on  account,  $37.50.  Jan,  24,  Received  from  sale 
of  safe,  $140.  Jan.  25,  Paid  cash  for  premium  on  insurance,  $20.  Jan.  20,  Received  for  petty  cash 
sales,  $36.84.  Jan.  26,  Paid  cash  for  set  of  office  chairs,  $24.50.  Jan.  27,  Received  from  Insurance 
Co.  rebate  on  premium,  $3.75. 


JOBBING 


BOOT    AND    SHOE    BUSINESS 

Using':     Sales   Book,  Journal,  Cash    Book   and   Ledger 
DOUBLE  ENTRY 

Presuming  that  the  student  has  mastered  the  underlying  principles,  or  theory, 
of  bookkeeping  in  the  preceding  pages,  and  that  he  has  acquired,  in  some  degree, 
that  discipline  in  patience,  accuracy  and  taste  so  requisite  to  the  successful  account- 
ant, he  is  now  to  become  acquainted  with  some  of  the  forms  and  methods  in  use  in 
the  various  departments  of  business.  While  the  books  of  merchants  may  differ,  this 
difference  is  never  in  principle,  but  in  those  minor  details  and  methods  depending 
upon  the  extent  and  peculiarities  of  the  business,  to  which  the  intelligent  bookkeeper 
can  readily  adapt  himself.  In  fact,  the  best  record  can  only  be  made  by  the  use 
of  special  books  and  special  forms  adapted  to  the  requirements  of  the  business. 

In  entering  upon  the  practical  part  of  this  work,  the  student  may  treat  all  checks, 
postal  notes,  money  orders  and  sight  drafts  received,  unless  drawn  upon  us,  as  cash. 
Personal  accounts  should  be  ruled  up  and  footed  at  any  time  when  they  balance. 

In  business  it  is  customary  to  balance  personal  accounts  whenever  a  settlement 
or  agreement  is  arrived  at,  irrespective  of  when  the  Ledger  is  closed.  The  trans- 
actions in  this  set  should  be  first  written  in  the 

DAY   BOOK 

This  is  a  book  of  original  entry,  and  should  contain  a  complete  and  consecutive 
history  of  the  transactions  of  the  house,  made  in  the  order,  and  at  the  date,  of  their 
occurrence.  Its  language  should  be  clear  and  concise,  without  superfluous  words, 
or  lacking  in  sufficient  explanation.  As  the  entries  in  this  book  are  supposed  to  be 
made  while  the  facts  are  fresh  in  the  mind,  it  is,  when  properly  kept,  admissible  as 
evidence  in  a  court  of  justice.  The  first  money  column  in  this  book  is  called  the  item 
column,  and  the  second  the  amount  or  total  column.  Of  course  when  a  Sales  Book  is 
used  in  a  set  it  is  unnecessary  to  itemize  the  sale  in  the  Day  Book.  It  is  sufficient 
to  say:   "  Sold  Jno.  Doe  Mdse.  as  per  S.  B." 

Some  teachers  may  wish  to  have  their  pupils  secure  facility  in  making  concise 
records  in  the  Day  Book.  Such  can  do  so  in  this  set.  Those  who  do  not  desire  to  do 
so  will  find  the  transactions  themselves  recorded  in  Day  Book  form  and  hence  the 
Text  Book  may  be  considered  as  the  Day  Book.  If  the  Day  Book  be  written  the 
sales  need  not  be  itemized  in  it  but  in  the  Sales  Book. 

BILLS  RECEIVABLE  AND  BILLS  PAYABLE  BOOKS 

These  books  are  used  for  entering  notes  and  acceptances,  both  receivable  and 
payable.  By  reference  to  the  form  on  pages  loo  and  loi,  it  will  be  seen  that  num- 
erous columns  are  used  in  which  are  entered  the  particulars  concerning  the  paper. 
Great  care  should  be  exercised  in  filling  in  the  facts  in  the  Bill  Books,  computing 
the  maturity  of  the  paper,  etc.,  as  promptness  in  paying  or  collecting  the  same  will 
depend  upon  such  record.  These  are  auxiliary  books,  being  explanatory  to  entries 
in  the  Journal,  and  are  not  posted  from. 

93 


94  MODERN    ACCOUNTANT 

T  he  reccird  of  all  notes  receivable  and  payable  for  the  first  two  months  is  made 
and  offered  as  a  model.  It  is  not  intended  that  the  student  will  keep  a  note  book  in 
this  set. 

CASH   BOOK 

This  book  and  its  use  have  been  fully  explained  in  the  previous  exercise.  All  cash 
items  are  carried  from  the  Day  Book  directly  to  the  Cash  Book.  A  check  mark  (y/) 
should  be  placed  in  the  folio  column  in  the  Day  Book  on  the  proper  line,  to  show 
that  the  cash  item  has  been  transferred  to  the  Cash  Book  (see  transactions  6  and 
10,  Day  Book). 

JOURNAL 

Ail  transactions  not  recorded  in  the  Cash  Book  or  Sales  Book  will  be  entered 
in  the  usual  manner  in  the  Journal.  Caution:  When  a  purchase  is  made 
and  payment  in  full  or  in  part  only  is  given,  the  full  amount  must  first  be  recorded 
in  the  Journal  as  if  nothing  had  been  paid,  and  then  the  part  or  full  payment  must  be 
recorded  in  the  Journal,  Cash  Book,  or  both  as  .the  case  may  be.  The  account  with 
the  party  will  thus  show  us  the  full  credit  and  the  payment  or  payments.  When  a 
sale  is  made,  and  either  all  or  a  portion  only  of  the  bill  is  paid,  charge  the  entire  bill 
from  the  Sales  Book,  and  then  in  the  Cash  Book  or  the  Journal,  as  the  case  may  be, 
give  credit  for  the  payment. 

Check-mark  the  Day  Book  record  (if  one  is  made)  when  the  Journal  entry  is  made 
by  putting  a  check  mark  in  the  proper  column  (see  transactions  3  a;nd  8,  Day  Book). 

SALES  BOOK 

This  book  and  its  use  were  fully  explained  in  the  preceding  set.  It  is  to  be 
used  in  this  set  exactly  as  it  was  there,  and  the  student  is  again  referred  to  the 
explanation  of  it  given  on  page  70.  When  posting  from  this  book  to  the  account 
of  the  customer,  the  remark  is  always  Mdse. 

Almost  every  house  makes  daily  sales  to  occasional  customers  who  purchase 
in  very  small  amounts  and  who  pay  cash  for  each  purchase  as  it  is  made.  The  trade 
of  none  of  this  class  of  customers  is  of  sufficient  importance  to  warrant  the  keeping 
of  a  special  personal  account.  Hence,  such  transactions  are  grouped  as  "  Petty 
Sales."  Usually  as  such  a  sale  is  made,  a  ticket  for  it  is  placed  on  the  cashier's 
spindle,  and  when  the  cash  is  balanced  these  several  items  are  added  and  a  single 
entry  is  made  for  them  as  Petty  Sales.  These  transactions  should  be  entered  in 
the  Sales  Book  and  posted  to  the  debit  side  of  Petty  Sales  account  in  the  Ledger. 
An  entry  should  also  be  made  for  them  on  the  debit  side  of  the  Cash  Book,  and 
it  should  be  posted  to  the  credit  side  of  Petty  Sales  account  This  account  will 
always  balance,  but  it  will  enable  the  proprietor  to  determine  just  what  this  class 
of  trade  amounts  to. 

Another  object  in  keeping  an  itemized  record  of  the  sales  is,  in  case  a  cus- 
tomer should  send  for  a  duplicate  bill,   it  can  be  readily  furnished. 


DAY  BOOK 


95 


EXERCISE  XLI 


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96 


MODERN  ACCOUNTANT 
TRANSACTIONS 


19— 

Aug. 

10 

Bought  of  J.  Armstrong  &  Co., 
240  pr.   Buff  Oxford  Shoes,                               2  00 
120    "     Children's  Buff  Bal.,                             1  25 
72    "     Kip  Brogans,                                          2  35 

480 
150 
169 

00 

00 

20 

799 

20 

Paid  in  part  cash, 
"     freight  and  drayage,  cash, 

199 

20 

7 

50 

, 

12 

Bought  of  Louis  Gould  &  Co.,  Phila., 
240  pr.  Kip  Plow  Shoes,                                    1  75 
300    "     Misses'  Calf  Bal.,                                  1  50 
Gave  in  payment  my  note,  10  da.,  S% 
Cash  for  balance. 

420 
450 

00 
00 

870 

00 

700 
170 

00 
00 

14 

Received  of  C.  H.  Dexter,  cash  to  apply  on  account. 

10 

00 

15 

Sold  J.  Riley,  Clinton,  la., 

2  pr.   Child's  Buff  Bal.,                                        1  60 
6    "     Buff  Oxford  Shoes,                                   2  50 
Rec'd  in  part  payment  P.  O.  M.  Order, 

3 
15 

20 
00 

18 

20 

10 

00 

15 

Petty  sales  per  cash  drawer. 

48 

60 

17 
19 

Sold  Lawrence  Cook,  for  cash, 

2  pr.   Ladies'  Lasting  Bal.,                               1  75 

3  "     Farmers'  Kip  Boots,                                 3  25 

Received  of  C.  H.  Dexter,  cash  to  apply  on  account. 

3 

9 

50 
75 

13 

5 

25 

00 

20 

22 

Sold  J.  W.  Lunt,  on  acct., 
4  pr.  Ladies'  Kid  Sewed  Bal.,                          2  85 
2    "     Boys'  Stoga  Boots,                                   3  15 

A.  W.  Mason  has  withdrawn  cash  for  private  use. 

11 

6 

40 
30 

17 

25 

70 

00 

22 
25 

Paid   cash  for  my  note,    now    due,    favor  Louis 
Gould  &  Co.,  and  interest  thereon  to  date. 
Face  of  note. 
Interest  on  same,  10  da.,  8% 

Sold  R.  C.  Windsor,  Milwaukee, 
8  pr.  Buff  Oxford  Shoes,                                   2  75 
3    "     Ladies'  Kid  Sewed  Bal.,                          3  50 
Received  in  part  payment,  cash. 

700 
1 

00 
17 

701 
32 

17 

22 
10 

00 
50 

50 

20 

00 

26 

Paid  Louis  Gould  &  Co.,   on  my  note  of  the  3d 
inst.,  cash. 

125 

00 

26 

Sold  J.  W.  Lunt, 
6  pr.  Farmers'  Kip  Boots,                                3  25 
4    "     Child's  Buft  Bal.,                                    1  50 

Less  lOjt 
Received  in  part  payment,  cash, 

19 
6 

50 
00 

22 

25 
2 

50 

55 

95 

15 

00  1 

1 

27 

Paid  cash  for  postage  stamps, 

3 

00 

27 

Paid  J.  Armstrong  &  Co.,  cash  on  acct., 

100 

00 

27 

Petty  sales  per  cash  drawer, 

85 

70 

28 

Sold  M.  W.  Fuller,  for  cash, 

6  pr.  Kip  Plow  Shoes,                                         2  25 

13 

60 

LEDGER  HEADINGS 
TRANSACTIONS-Continued 


97 


Aug. 

28 

Received  of  J.  W.  Luut,  cash  on  acct., 

20 

28 

Sold  A.  W.  Green, 

4  pr.  French  Calf  Pegged  Boots,                    4  00 
2    "    Farmers'  Kip  Boots,                                3  25 
6    "     Buff  Oxford  Shoes,                                   2  50 

5  "    Kip  Brogans,                                            2  80 

Received  in  payment  his  note  at  60  days,  with  G% 

interest  added  in  face  of  note. 
Interest  for  60  da.  at  6^, 
Face  of  note, 

16 
6 

15 
14 

00 
50 
00 
00 

52 

51 

50 
52 

02 

29 

Paid  Louis  Gould  &  Co.,  cash  on  my  note  of  the 
3d  inst.. 

55 

00 

30 

Received  of  R.  C.  Windsor,  in  full  of  his  account, 
J.  Armstrong  &  Co.'s  order  on  me. 

*# 

** 

31 

Paid  rent  of  store  for  August  in  cash, 

60 

00 

EXERCISE    XLII 

To  the  atudent:     Open  the  following  Ledger  headings: 

A.  W.  Mason,  15  lines;  J.  B.  Campbell,  10;  Merchandise,  1  page;  Shipment 
L.  B.  Montonya  &  Co.,  10;  Shipment  Thompson  &  White,  Omaha,  8;  Interest 
and  Discount,  20;  Collection  and  Exchange,  12;  Cash  Discount,  8;  Expense,  20; 
Profit  and  Loss,  1  page;  Cash,  12;  Bills  Receivable,  10;  Bills  Payable,  25;  C.  H. 
Dexter,  8;  J.  Riley,  Clinton,  la.,  8;  R.  C.  Windsor,  15;  J.  W.  Lunt,  15;  J.  Arm- 
strong &  Co.,  15;  R.  A.  Lambert.  8;  L.  B.  Montonya  &  Co.,  8;  Geo.  W.  Simpson, 
10;  J.  Mershon  &  Co.,  10;  J.  B.  Merriam,  Boston,  8;  Thomas  Hamer,  8;  W.  F. 
Johnson,  8;  Thompson  &  White,  Omaha,  Nebr.,  8;  D.  B.  Bradshaw,  Lynn,  Mass., 
8;  C.  M.  Henderson  &  Co.,  Chicago,  8;  H.  D.  Comstock  &  Co.,  New  York,  8;  C. 
H.  Fargo  &  Co.,  Chicago,  8;  Louis  Gould  &  Co.,  8;  A.  W.  Dudley,  8;  J.  D.  Fielding, 
8;  Petty  Sales,  12;  M.  W.  Fuller,  6;  A.  W.  Green,  6;  D.  D.  Morse,  St.  Louis,  Mo.,  6; 
J.  F.  Warner,  8;  C.  W.  Marshall,  6;  C.  E.  Rogers,  6;  D.  W.  Metcalf,  City,  6; 
H.  C.  Parker,  6;  Lawrence  Cook,  6. 

EXERCISE   XLIII 

To  the  Student :  You  may  now  write  up  the  Cash  Book,  Sales  Book  and  Journal 
for  August.  Use  a  double  sheet  of  journal  paper,  the  Journal  entries  to  go  on  page 
1  and  the  Cash  Book  entries  on  pages  2  and  3,  thus: 

Aug.  1.   Record  in  Cash  Book  on  debit  side  and  check-mark  entry  in  Day  Book, 
"      1,    Record  in  Cash  Book  on  credit  side  and  check-mark  entry  in  Day  Book. 
"      3.   Record  cash  payment  in  Cash  Book  on  credit  side,  thus:  Aug.  j,  Louts 
Gould  &  Co.,  $2^8.40. 

Aug.  3.   Record  note  payment  in  Journal,  thus: 

Aug.  J,  Louis  Gould  &  Co $200 

Bills  Pay $200 

Aug.  6.    Record  in  Sales  Book,  then  in  Cash  Book  on  debit  side. 
"     8.   Record  in  Sales  Book  only. 


98  MODERN    ACCOUNTANT 

Aug.  10.  Record  in  Journal,  crediting  J.  A.  &  Co.  for  full  amount  of  bill.  Re- 
cord  the  cash  payment  in  Cash  Book  on  credit  side,  debiting  J.  A.  &  Co.  for  the 
payment.     Record  the  payment  for  freight  in  the  Cash  Book  on  credit  side. 

Complete  the  transactions,  always  check-mark  in  Daj''  Book  to  show  transfer,  and 
remember  that  each  entry  in  the  Cash  Book  must  show  proper  debit  and  credit. 

EXERCISE  XLIV 

To  the  Student:  You  are  now  ready  to  post  from  the  Sales  Book,  Journal  and 
Cash  Book  to  the  Ledger. 

While  it  is  customary  in  business  to  keep  the  posting  up  to  date,  it  will  not  be 
altogether  convenient  for  you  to  follow  the  dates  and  post  first  an  entry  from  the 
Sales  Book  or  Journal,  and  then  one  from  the  Cash  Book,  or  the  reverse;  therefore 
you  may  post,  first  the  Sales  Book,  next  the  Journal  and  lastly  the  Cash  Book. 

POSTING    TKE    JOURNAL 

The  debits  and  credits  will  be  posted  from  the  Journal  in  the  usual  manner 
You  will,  however,  observe  the  following: 

In  this  set  the  explanatory  column  in  the  Ledger  is  to  be  used.  When  a  debit 
item  is  being  posted  to  the  debit  side  of  the  proper  account  in  the  Ledger,  the  name 
of  the  credit  item  will  be  written  in  the  explanatory  space.  By  so  doing  we  are  able 
to  determine  the  nature  of  the  item  that  produces  the  debit.  The  procedure  is 
reversed  when  a  credit  item  is  posted,  e.  g. :  The  first  debit  item  is  Merchandise, 
which  will  appear  on  the  debit  side  of  the  Merchandise  account  as  follows:  Aug.  /, 
C.  H.  Fargo  &  Co.,  $2jo. 

The  second  debit,  which  is  posted  on  debit  side  of  Mdse.  account:  Aiig.  j,  LoJiis 
Gould  &  Co.,  $4^8.40. 

Continue  the  same  with  the  rest  of  the  debit  items. 

The  first  credit  item  in  the  Journal  is  C.  H,  Fargo  &  Co.  Write  on  the  credit 
side  of  this  account,  Aug.  /,  Mdse.,  $2yo. 

The  second  credit  item  is  Louis  Gould  &  Co.  Write  on  the  credit  side  of  this 
account,  Aitg.  j,  Mdse.,  $4.^8.40. 

POSTING    THE    CASH    BOOK 

To  Post  the  Debit  Side. — The  cash  account  in  the  Ledger  is  to  be  debited  for  the 
total  amount  received,  ;jii2754.05;  post-mark  the  entry.  The  credit  items  that  make 
up  the  total  debit  of  $2754.05  are  to  be  posted,  item  by  item,  viz.  :  Cr.  A.  W.  Mason 
for  $2500;  post-mark  the  entry.  Cr.  J.  D.  Fielding  for  $13;  post-mark  the  entry. 
Cr.  C.  H.  Dexter  for  $10;  post-mark  the  entry.  The  explanation  will  be  cash  in  each 
case.  Proceed  in  like  manner  with  the  rest  of  the  items  on  the  debit  side  of  the  Cash 
Book. 

To  Post  the  Credit  Side.— The  total,  $1974.27,  is  to  be  posted  to  the  credit  side  of 
the  cash  account;  post-mark  the  entry.  All  the  items  on  this  side  of  the  Cash  Book 
are  debit  items  and  must  be  posted  to  the  debit  side  of  the  various  accounts  in  the 
Ledger,  viz.  :  Dr.  C.  H.  Fargo  &  Co.,  $270;  post-mark  entry.  Dr.  Louis  Gould  &  Co., 
$258.40;  post-mark  entry.  Dr.  J.  Armstrong  &  Co.,  $1:H).20.  Dr.  Mdse.  (Frght, ) 
S7.50,  etc. 


SEPTEMBER    TRANSACTIONS  99 

As  soon  as  you  have  completed  the  posting  take  a  trial  balance  and  compare  with 

the  following  results: 

Cash  on  hand $779.78 

Bills  Rec.  oil  hand 52.02 

Bills  Pay.  unpaid 20. 

Personal  accounts  owing  me 19.60 

Personal  accounts  I  owe 487. 50 

Copy  the  following: 

INVENTORY  OF  PROPERTY  UNSOLD,  AUGUST  31,   19— 


54  pr. 

10 

68 

46 
220 
114 

67 
234 
300 

77 

21 


French  Calf  Pegged  Boots, 
Farmers'  Kip  Boots, 
Boys'  Fine  Kip  Boots, 
Ladies'  Lasting  Balmorals, 
Buff  Oxford  Shoes, 
Children's  Buff  Balmorals 
Kip  Brogans, 
Kip  Plow  Shoes, 
Misses'  Calf  Balmorals, 
Ladies'  Kid  Sewed  Balmorals, 
Boys'  Stoga  Boots, 


(a)  $3.50 

@  2.60 

@  2.00 

@  L25 

@  2.15 

@  1.25 

@  2.35 

@  2.00 

@  1.75 

@  2.50 

(3)  1.75 


EXERCISE   XLV 

To  tJie  Student:  You  may  now  close  the  Ledger.  However,  you  will  only  close 
accounts  showing  losses  and  gains.  Credit  up  the  inventory  and  close  the  following 
accounts:  Mdse. ,  Interest  and  Expense.  Before  closing  Profit  and  Loss  account, 
test  it  with  the  Proprietor's  account,  which  should  show,  when  closed,  A.  W.  Mason's 
net  capital  at  closing,  $2747.60.  Close  Profit  and  Loss  account,  and  also  Mason's 
account.      Make  a  balance  sheet. 

EXERCISE   XL VI 

To  the  Student:  Write  up  Journal,  Sales  Book,  and  Cash  Book  for  the  transactions 
for  September.  Write  cash  entries  for  September  beneath  those  recorded  for  August. 
Have  work  approved. 


19— 
Sept. 


Bought  of  D.  B.   Bradshaw,  Lynn,   Mass., 
56  pr.  Farmers'  Kip  Boots,  2  62 

Gave  my  note  at  20  da.  in  payment 
Paid  freight  on  same  in  cash, 

Paid  J.  Armstrong  &  Co.  cash  on  account. 

Bought  of  J.  B.  Merriam,  Boston, 
60  pr.  Boys'  Stoga  Boots,  1  60 

24   "    Kip  Brogans,  2  25 

30   "    Children's  Buff  Bal.,  1  20 

Gave  in  part  payment  my  note  at  30  da.. 
Paid  cash  for  freight  and  drayage, 

Sold  D.  D.  Morse,  St.  Louis,  Mo., 

12  pr.  Misses'  Calf  Bal.,  2  25 

6   "    Kip  Plow  Shoes,  2  00 

6    "    Farmers'  Kip  Boots,  3  12 

10%  and  5%  off. 


146 

146 

72 

13 
75 

96 

54 

36 

186 

100 

7 

27 

12 

18 

72 

57 

72 

8 

37 

49 

35 

72 
75 


45 


100 


MODERN    ACCOUNTANT 
BILLS 


When 
Received. 

No. 

L.  F. 

Maker  or  Acceptor. 

III  Favor  of 

Where 
Payable. 

Received  for 

Dats  0 
Paper, 

19— 
Aug.  28 

Sept.  4 

1 
2 

A.  W.  Green 
D.  D.  Morse 

Myself 
Myself 

His  office 
My  office 

Mdse. 
Mdse. 

Aug.  28 
Sept.  4 

BILLS 


When 
Issued. 

No. 

L.  F. 

Maker  or 
Acceptor. 

In  Favor  of 

Where 
Payable. 

Given  for 

Date  of 
Paper. 

19— 

Aug.      3 

1 

Myself 

Louis  Gould  &  Co. 

My  office 

Mdse. 

Aug.    3 

12 

2 

Myself 

Louis  Gould  &  Co. 

My  office 

Mdse. 

12 

Sept.    1 

3 

Myself 

D.  B.  Bradshaw 

My  office 

Mdse. 

Sept.    1 

3 

4 

Myself 

J.  B.  Merriam 

My  office 

Mdse. 

3 

11 

5 

Myself 

Henry  Warren 

My  office 

Loan 

11 

12 

f) 

Myself 

J.  Mershon  &  Co. 

My  office 

Mdse. 

12 

13 

7 

Myself 

Thomas  Hamer 

My  office 

Mdse. 

13 

14 

8 

J.  E.  Church 

Myself 

Un.  Nat.  Bank 

Accomodat'n 

14 

15 

9 

Myself 

J.  Armstrong  &  Co. 

My  office 

On  acc't. 

15 

BILL    BOOKS 
RECEIVABLE 


101 


When  Due. 


Time. 


60  days 
60    " 


19— 
19- 


PIH 


27 


Amount, 


a; 


a  « 


When  and  How 
Disposed  of. 


PAYABLE 


When  Due. 

p 
Q% 

O 

Time. 

d 

o 

u 
a 

< 

>> 

cS 

aJ 
a 
s 
t— > 

t— 1 

< 

O 

> 

o 

c5 
Q 

Amount. 

a  <u 

When  and  How 
Redeemed. 

90  days 

19- 

1 

200 

Aug. 

26 

$125;  Aug.  29, 
$55;  Sept.  29, 
$20. 

10    " 

19— 

22 

700 

Q% 

1 

17 

Aug. 

22 

Paid  in  Cash. 

20    " 

19— 

21 

146 

72 

Sept. 

24 

Paid  in  Cash. 

30    " 

19— 

3 

100 

90    " 

19— 

10 

177 

63 

15    " 

19- 

27 

• 

50 

13 

Sept. 

27 

Paid  in  Cash. 

30    " 

19- 

13 

75 

30    " 

19— 

14 

1600 

40    " 

19— 

25 

75 

102 


MODERN    ACCOUNTANT 


Sept. 


10 
11 

12 


13 


14 


15 


16 


17 


Received  in  payment  his  note  at  GO  da. 

with  G%  interest  added, 
Interest  on  $49.35  for  60  da.  at  6%, 

Face  of  note  received, 

Sold  Geo.  W.  Simpson,  on  acct., 
4  pr.  Kip  Brogaus, 
2   "    Ladies'  Lasting  Bal., 


2  65 
1  62 


J.  Armstrong  &  Co.  have  drawn  on  me  at  sight 
through  Commercial  National  Bank,  paid  cash 
for  draft  and  exchange, 

Face  of  draft, 

Exchange, 

Sold  R.  C.  Windsor,  Milwaukee, 

10  pr.  Frencli  Calf  Pegged  Boots,  3  85 

6    "    Farmers'  Kip  Boots,  2  95 

Received  in  part  payment, 

Petty  sales  per  cash  drawer, 

Borrowed  of  Henry  Warren  on  my  note. 
Face  of  note,  interest  added. 
Interest  for  90  da.  at  6^, 
Proceeds  received  in  cash, 

Bought  of  J.  Mershon  &  Co.,  Chicago, 
24  pr.  Bovs'  Stoga  Boots,  1  65 

36   "    Men's  Thick  Boots,  3  50 

60  boxes  Mason's  Challenge  Blacking,  02J 

Gave  in  payment  cash. 
My  note  at  15  da.  at  6$?, 


Bought  of  Thos.  Hamer, 
12  pr.  Custom  Kip  Boots,  2 

24    "    Calf  Bal.,  3 

Gave  in  part  payment  my  note  at  30  da.. 


J.  E.  Church  has  accepted  my  draft  on  him  at 
30  da.,  my  favor,  payable  at  Union  National 
Bank,  for  my  accommodation,  which  I  have 
discounted  at  the  same  bank. 

Face  of  draft, 

Discount  off  at  1%, 

Proceeds  to  my  credit. 

Paid  J.  Armstrong  &  Co.,  on  acct., 
My  note  at  40  da.  for 
Cash, 

Shipped  L.  B.  Montonya  &  Co.,  Cincinnati,  for 
sale  on  my  account  and  risk, 

20  pr.  Ladies'  Lasting  Bal.,  1  20 

50   "   Ladies' Kid  Sewed  Bal.,  2  50 

44   "    French  Calf  Pegged  Boots,  3  50 

80   "    Kip  Brogans,  2  35 
Boxing  and  drayage  paid  in  cash, 


Sold  R.  A.  Lambert, 
7  pr.  Kip  Brogans, 
3   "    B03S'  Fine  Kip  Boots, 
1   "    Farmers'  Kip  Boots, 
Received  in  part  payment, 


2  50 
2  25 


49 

49 

10 

60 

3 

24 

13 

100 

75 

100 

38 

50 

17 

70 

56 

25 

62 

177 

2 

63 

175 

39 

60 

126 

1 

25 

166 

66 

85 

50 

** 

** 

** 

** 

109 

75 

1600 

9 

33 

1590 

67 

75 

80 

155 

#* 

*»* 

*** 

*** 

#** 

4 

«» 

** 

* 

*# 

4 

IHf 

20 

84 


84 


75 


20 


40 


63 


85 


20 


80 


25 


TRANSACTIONS 


103 


Sept. 


18 
19 

20 

20 
21 

2-1 
25 

26 

27 

28 
29 


30 
30 


Bought  of  J.  B.  Middleton  &  Co.,  for  cash, 
New  set  of  books  for  office. 

Sold  R.  C.  Windsor,  Milwaukee, 
2  pr.  Calf  Bal., 
4  "    Kip  Plow  Shoes, 
Received  his  check  on  account. 


4  00 
2  25 


Have  drawn  on  L.    B.  Montonya  &  Co.  at  10  da. 
sight  against  consignment  of  16th  inst., 
Face  of  draft, 
Discount  off  12  da.  at  6^, 
Exchange,  }s%, 
Proceeds  placed  to  my  credit. 

Paid  cash  for  advertising  in  The  Times  to  date. 

Paid  cash   for  my  note  favor  D.  B.  Bradshaw  of 
the  1st  inst.. 
Face  of  note, 
Interest  on  same  for  20  da.  at  Qfc, 

A.  W.  Mason  has  withdrawn  for  private  use,  cash. 

Drew  at  sight  on  R.  C.  Windsor  for  balance  of  his 
account, 
Charges  for  collection, 
Proceeds  to  my  credit. 

Sold  J.  W.  Luut, 

2  pr.  Ladies'  Lasting  Bal.,  1  80 

2  "    Boys'  Stoga  Boots,  2  30 

Received  cash  on  account, 

Paid  cash  for  my  note   of  the    12th  inst.,  favor 
J.  Mershon  &  Co., 
Face  of  note, 
Interest  for  15  da.  at  6^, 

Received  from  L.  B.  Montonya  &  Co.  an  account 
sales  of  my  shipment  of  the  16th  inst., 
Net  proceeds. 

Sold  J.  F.  Warner, 
6  pr.  Kip  Plow  Shoes,  2  25 

2  "     Farmers'  Kip  Boots,  3  10 

3  "     Men's  Thick  Boots,  4  00 
Received  in  payment  balance  of  my  note  favor 

Louis  Gould  &  Co.  of  the  3d  ult., 
Interest  due  on  same  at  Q%, 
Cash  for  balance, 

Received  cash  of  Geo.  W.  Simpson,  on  acct., 

Paid  cash  for  rent  of  store  for  September, 


13 

8 
9 

17 

10 

398 

80 
50 
70 

400 

19 

146 

72 
49 

147 

25 

37 

25 
95 

38 

3 

4 

60 
60 

8 

10 

50 

13 

50 

531 

13 

6 

12 

50 
20 

31 

20 

** 

10 

** 

10 
60 

25 


50 


21 


20 


20 


13 


50 


EXERCISE   XL VII 

To  the  Student:     Post  transactions  for  September  from  Journal,  Sales  Book  and 
Cash  Book  to  Ledger,   and  take  a  trial  balance.     Test  trial  balance  with  following: 

RESULTS 

Cash  on  hand $2466.60 

Bills  Receivable  on  hand 101.86 

Bills  Payable  unpaid  . . . , 2027.63 

Personal  Accounts  owing  me . .     161. 39 

Personal  Accounts  I  owe 327,70 


104 


MODERN    ACCOUNTANT 

INVENTORY  OF  PROPERTY  UNSOLD.   SEPTEMBER   30,    19 


22  pr.  Ladies'  Lasting  Bal., 

27    "    Ladies'  Kid  Sewed  Bal., 

51    "   Farmers'  Kip  Boots, 

65   "    Boys'  Fine  Kip  Boots, 
103    "    Boys'  Stoga  Boots, 
218   "    Kip  Plow  Shoes, 
288   "    Misses'  Calf  Bal., 
220   "    Buff  Oxford  Shoes, 
144    "   Children's  Buff  Bal., 

33   "    Men's  Thick  Boots, 

12   "   Custom  Kip  Boots, 

22   "   Calf  Bal., 

50  boxes  Mason's  Challenge  Blacking. 


@ 


$1.50 
2.50 
2.75 
2.00 
2.00 
1.75 
1.60 
2.00 
1.25 
3.50 
2.50 
3.25 
.02i 


EXERCISE  XLVIII 

To  tJic  Student:     Close  the  Ledger  as  directed  in  August,  and  in  addition  close 
all  the  real  accounts.     Make  out  a  balance  sheet. 

PRICE   LISTS   FOR   AUGUST   AND   SEPTEMBER 

The  prices  given  in  the  following  lists  may  be  substituted  for  those  given  in  the 
transactions  if  thought  desirable: 


ARTICLES. 


Boys'  Fine  Kip  Boots 

Boas'  Stoga  Boots 

Buff  Oxford  Shoes 

Calf  Bal 

Children's  Buff  Bal 

Custom  Kip  Boots  

French  Calf  Pegged  Boots  . . 

Farmers'  Kip  Boots 

Kip  Plow  Shoes 

Kip  Brogans 

Ladies'  Lasting  Bal 

Ladies'  Kid   Sewed  Bal. . . . , 

Men's  Thick  Boots 

Misses'  Calf  I'al , 

Mason's  Challenge  Blacking 


BUYING  PRICES  FOR  AUG.  AND  SEPT. 


List  1. 


52.00  pr. 
1.60  pr. 
L75pr. 
2.75  pr. 
1.00  pr. 
2.00  pr. 
3.75  pr. 
2.50  pr. 
1.50  pr. 
2.00  pr. 
1  50pr. 
2.00  pr. 
3.00  pr. 
1.50  pr. 
.02  bx. 


2.25 

$2.10 

1.40 

1.50 

1.60 

1.75 

2.50 

2.60 

1.10 

L15 

1.80 

1.75 

3.50 

3.60 

2.25 

2.50 

1.60 

1.40 

2.10 

1.80 

1.40 

L60 

2.10 

L80 

2.75 

2.85 

1.25 

1.30 

.02 

.02 

$2.20 
1.60 
1.85 
2.70 
1.00 
2.00 
3.70 
2.40 
1.30 
1.90 
1.80 
2.15 
3.00 
1.40 
.02i 


$2.00 
1.65 
1.70 
2.50 
1.15 
2.25 
3.75 
2.60 
1.50 
2.10 
1.40 
1.90 
3.15 
1.60 
.02i 


SELLING  PRICES  FOR  AUG.  AND  SEPT. 


List  1. 


52.'^5pr. 
1.80  pr. 
2.00  pr. 
3.00  pr. 
1.15  pr. 
2.25  pr. 
4.00  pr. 
2.75  pr. 
1.75  pr. 
2.25pr. 
1.75  pr. 
2.25  pr. 
3.40  pr. 
1.75  pr. 
.05  bx. 


B2.50 
1.60 
1.85 
2.75 
1.25 
2.00 
4.25 
2.50 
1.85 
2.35 
1.60 
2.. 35 
3.00 
1.50 
.05 


$2.35 
1.70 
2.00 
2.80 
1.30 
2.10 
4.80 
2.75 
1.70 
2.10 
1.80 
2.00 
3.00 
1.50 
.05 


B2.50 
1.75 
2.10 
2.90 
L15 
2.25 
4.00 
2.70 
1.60 
2.15 
2.00 
2.40 
3.50 
L75 
.05 


$2.25 
1.85 
2.00 
2.60 
L25 
2.50 
4.10 
3.00 
1.80 
2.40 
1.75 
2.15 
3.50 
2.00 
.05 


RESULTS  FOR  AUGUST 


List  1. 


Cash  on  hand 

Bills  Receivable  on  hand  . . . . 

Bills  Payable  unpaid    

Personal  Accounts  receivable 
Personal  Accounts  payable . . 
A.  W.  Mason's  net  capital  . . . 


$862.08 

45.20 

29.00 

6.55 

385.46 

2553.47 


$909.33 

45.30 

21.20 

6.10 

370.55 

2556.48 


$959.. 38 

47.67 

24.80 

7.25 

390.47 

2559.23' 


$912.48 

45.20 

38.00 

8.00 

400.78 

2554.75 


$846.58 

46.86 

32.60 

7.50 

397.55 

2557.44 


OCTOBER    TRANSACTIONS 
RESULTS  FOR    SEPTEMBER 


105 


Cash  on  hand 

Bills  Receivable  on  hand 

Bills  Payable  unpaid 

Personal  Accounts  receivable. 
Personal  Accounts  payable. . . 
A.  W.  Mason's  net  capital  . . . . 


List  1. 


$2537.36 

86.65 

2027.63 

145.80 

177.91 

2546.07 


$2606.33 

83 .  39 

2027 . 63 

146.65 

134 . 90 

2554.09 


$2644.80 

86.27 

2027 . 63 

145.25 

162.32 

2592.12 


$2582.48 

85.61 

2027.63 

147.35 

189.48 

2547.43 


5 


$2515.61 

92.43 

2027.63 

148.65 

203.65 

2554.66 


To  the  Student:  Read  the  introductory  instructions,  then  write  up  the  Cash 
Book,  Journal  and  Sales  Book  as  per  model  forms  given. 

INSTRUCTIONS  FOR  OCTOBER   AND   NOVEMBER 

It  has  been  decided  to  change  the  form  of  our  books  somewhat.  We  will  dis- 
pense with  the  use  of  the  Day  Book  as  a  separate  book,  and  make  the  Day  Book  expla- 
nations in  the  Journal  immediately  after  each  Journal  entry.  This  will  make  our 
Journal  what  is  sometimes  called  a  ''''Journal- Day  Book''  or  an  ''''Explanatory  Journal.'" 
The  explanations  should  be  written  in  a  smaller  hand  than  the  Journal  entry.  See 
form  of  Journal  on  page  110. 

The  Day  Book  as  a  separate  and  distinct  book  is  now  very  little  used  among  practical  book- 
keepers, its  use  being  properly  supplied  by  explanations  to  entries  in  other  books. 

All  cash  transactions  will  be  entered  at  once  in  the  Cash  Book,  and  will  not 
appear  in  the  Journal.  The  explanation  to  each  entry  in  the  Cash  Book  must  be 
carefully  made,  since  it  is  to  serve  instead  of  a  Day  Book  entry.  This  method  will 
make  our  Cash  Book  and  Journal  books  of  original  entry,  since  the  transactions  are 
entered  first  in  them. 

TRANSACTIONS 

Oct.  1,  19 — .  A.  W.  Mason  has  this  day  admitted  J.  B.  Campbell  as  a  partner 
in  the  business,  gains  and  losses  to  be  shared  as  follows:  A.  W.  Mason  two-thirds 
and  J.  B.  Campbell  one-third.  J.  B,  Campbell  invests  cash,  $1500,  and  pays  A.  W. 
Mason  $500  for  one-third  of  the  good- will  of  the  concern. 

This  should  be  entered  in  full  in  the  Journal,  so  as  to  preserve  a  complete  record  of  this  impor- 
tant transaction.     See  form,  page  110. 

Oct.  1.     Sold  to  C.  W.  Marshall  for  cash,  1  pr.  Men's  Thick  Boots,  S4.25. 
Enter  this  in  Sales  Book  as  per  form  on  page  107. 

Oct.  1.     Petty  sales  per  ca-sh  drawer,  $18.30. 

Before  attempting  to  make  the  entries  for  this  read  explanation  under  ''The  Petty  Sales 
Ccluntn,"  page  108. 

Oct.  1.      Sold  to  W.  F.  Johnson,  6  pr.  Men's  Thick  Boots  at  $4,  $**;  2  pr.  Boys' 

Stoga  Boots  at  $2.20,  $*.**.     Total  $**.**.     Received  in  part  payment,  cash,  $20. 

Enter  the  sale  in  the  Sales  Book.  See  form,  page  107.  Enter  the  cash  in  the  Cash  Book  to 
the  credit  of  W.  F.  Johnson.     See  form,  page  108. 

Oct.  3.     Bought  of  J.  Armstrong  &  Co.,  30  pr.  Kip  Balmorals  at  $2,  $**;  12  pr. 

Calf  Balmorals  at  $2.75,  $**.     Total  $**.     Gave  in  payment  cash,  less  cash  discount 

3%,  $**.**. 

The  new  firm  having  ample  cash  on  hand,  has  decided  to  discount  all  its  bills,  and  secure  the 
benefit  of  the  cash  discounts  offered  by  the  wholesale  houses.  Before  attempting  to  enter  this  item 
in   the  Cash   Book,  read  carefully  ""How  to  Enter  Cash  Discounts  "  on  page  109. 


106  MODERN    ACCOUNTANT 

Oct.  3.  Paid  cash  for  our  note  of  the  3d  ult.,  favor  J.  B.  Merriam,  Boston,  and 
interest  to  date.      Face  of  note,  -SI 00;  interest  at  G%,  I.**.      Total  $***.**. 

Oct.  4.  Shipped  to  Thompson  6c  White,  Omaha,  Neb.,  for  sale  on  joint  account 
of  ourselves  and  themselves,  each  one-half:  40  pr.  Boys'  Fine  Kip  Boots  at  $2,  $**; 
25  pr.  Boys'  Stoga  Boots  at  $1.80,  $**;  100  pr.  Kip  Plow  Shoes  at  $2,  S***;  20  pr. 
Men's  Thick  Boots  at  $3.75,  $**;  50  pr.  Misses'  Calf  Balmorals  at  $1.75,  $**.**. 
Total  $487.50. 
See  Sales  Book. 

Oct.  0.  Sold  to  Geo.  W.  Simpson,  on  account,  2  pr.  Farmers'  Kip  Boots  at  $3, 
$*;  4  pr.  Kip  Balmorals  at  $2.50,  $**.  Total  $**.  10%  and  5%  ofif,  •$*.**.  Net 
amount  $**.**. 

Oct.  7.  Bought  of  D.  B.  Bradshaw,  Lynn,  Mass.,  30  pr.  Farmers'  Kip  Boots  at 
$2.40,  $72;  20  pr.  Custom  Kip  Boots  at  $3,  $60.  Total  $132.  10%  and  5%  off.  Net 
amount  $***.**.     2%  off  for  cash  in  10  days. 

Enter  in  your  Journal  the  net  amount  after  taking   off  the  trade  discounts.     Do  not  take  off  the 
cash  discount  until  you  pay  the  bill, 

Oct.  7.     Petty  sales  per  cash  drawer,  $10.60. 

Oct.  10.  Sold  to  R.  C.  Windsor,  6  pr.  Boys'  Stoga  Boots  at  $2,  $**;  3  pr.  Chil- 
dren's Buff  Balmorals  at  $1.45,  $*.**;  3  pr.  Buff  Oxford  Shoes  at  $2.50,  $*.**.  Total 
$**.**.      Received  in  part  payment,  cash,  $20. 

Oct.  11.  Borrowed  at  First  National  Bank  on  our  note  at  60  days,  $1000. 
Interest  deducted  at  7%,  $**.     Net  proceeds  received  in  cash,  $***. 

Oct.  13.  Paid  cash  for  our  30  days' note,  favor  Thomas  Hamer,  now  due.  Face 
of  note,  $75;  interest  to  date  at  6%,  $.**.      Total  $**.**. 

Oct.  14.  Bought  of  C.  M.  Henderson  &  Co.,  Chicago,  8  pr.  Calf  Balmorals  at 
$3,  $**;  6  pr.  Custom  Kip  Boots  at  $2.50,  $**.  Total  $**.  20%  and  5%  off,  $**.**. 
Net  amount  of  bill,  $**.**. 

Oct.  15.  Paid  D.  B.  Bradshaw,  Lynn,  Mass.,  amount  of  invoice  of  7th  inst.  less 
cash  discount.  Invoice  $112.86.  Cash  discount  2%,  $2.26.  Remitted  New  York 
draft  for  $110.60.     Paid  exchange  on  draft  2b(l\ 

Oct.  17.  Paid  cash  for  J.  E.  Church's  acceptance  of  the  14th  ult.,  favor  Union 
National  Bank,  $1600. 

Oct.  17.      Cash  sales  to  transient  customers,  $4.30. 

Oct.  18.  Sold  to  W.  F.  Johnson,  3  pr.  Farmers'  Kip  Boots  at  $3.25,  $*.**;  2  pr. 
Boys'  Fine  Kip  Boots  at  $2.50,  .$*.     Total  $14.75. 

Oct.  20.  Remitted  to  J.  B.  Merriam,  Boston,  in  full  of  account,  New  York 
exchange,  $**;  premium  on  draft,  50^.     Total  $**.**. 

Oct.  21.  Remitted  to  C.  M.  Henderson  &  Co.,  Chicago,  amount  of  their  invoice 
of  the  14th  less  cash  discount  at  3%.  Net  amount  of  invoice,  $**.**.  3%  cash 
discount,  $.**.     Net  cash  remitted,  $**.**. 

Oct.  23.     Received  of  Geo.  W.  Simpston,  on  account,  cash,  $10. 

Oct.  24.  Sold  to  R.  C.  Windsor,  Milwaukee,  4  pr.  Calf  Balmorals  at  $3.75,  $**; 
3  pr.  Buff  Oxford  Shoes  at  $2.50,  $*.**.  Total  $22.50.  Received  in  part  payment, 
cash,  $15. 

Oct.  25.  Paid  J.  Armstrong  &  Co.,  cash  for  our  note  of  the  15th  ult.  and  inter- 
est.    Face  of  note,  $**;  interest  at  6%,  $.**.     Total  $**.**. 


INVENTORY 


107 


Oct.  26. 
Oct.  27. 

Oct.  29. 
Neb.,  of  our 
$284.16. 

Oct.  30. 

Oct.  30. 
Misses'  Calf 
Total  $**.**. 

Oct.  30. 

Oct.  30. 


Petty  sales  per  cash  drawer,  $4-2.75. 

Received  cash  of  A.  W.  Green  in  payment   of  his  note   of  August  28, 

Received  an  account  sales  from   Messrs.  Thompson  &  White,  Omaha, 
shipment  of  the  4th  inst.  on  joint  account.      Our  one- half  net  proceeds, 

Paid  J.  Mershon  &  Co.,  on  account,  D.  D.  Morse's  note  of  the  4th  ult. , 

Sold  to  C.  E.  Rogers,  3  pr.  Buff  Oxford  Shoes  at  $2.50,  $*.**;  5  pr. 
Balmorals  at  $2,  $**;  5  boxes  Mason's  Challenge  Blacking  at  5^5,  $.**. 
Received  in  payment  cash  in  full. 
Paid  cash  for  advertising  in  The  Sun  to  date,  $16.50. 
Paid  rent  of  store  for  October  in  cash,  $60. 


19— 


SALES  SOCK 


Oct.       1 

1 
1 


C.  W.  Marshall 

1  pr.  Men's  Thick  Boots, 


Cash 


Petty  Cash  Sales 


Per  cash  drawer 


W.  F.  Johnson, 
6  prs.  Men's  Thick  Boots, 
2    "     Boys'  Stoga  Boots, 


Thompson  &  White,  Omaha,  Neb. 

Shipt.  Thompson  &  White. 
40  prs.  Bo3's'  Fine  Kip  Boots, 
25    "     Boys'  Stoga  Boots, 
100    "     Kip  Plow  Shoes, 
20    "     Men's  Thick  Boots, 
50    "     Misses'  Calf  Balmorals, 


Geo.  W.  Simpson, 
2  prs.  Farmers'  Kip  Boots, 
4    "     Kip  Balmorals, 


\Qi  and  b%  off. 


on  acct. 

$4. 
2.20 


1.80 

2. 

3.75 

J, 75 


on  acct. 
$3. 
2.50 


4 

18 

24 

4 

40 

28 

243 

243 

80 

45 

200 

75 

87 

50 

487 

50 

6 

10 

16 

2 

32 

13 

25 
30 

40 

75 


68 


INVENTORY  OF  PROPERTY  UNSOLD,  OCTOBER  31,  19- 


6  pr.  Men's  Thick  Boots, 

22  "  Ladies'  Lasting  Balmorals, 

27  "  Ladies'  Kid  Sewed  Balmorals, 

76  '*  Farmers'  Kip  Boots, 

23  "  Boys'  Fine  Kip  Boots, 
70  "  Boys'  Stoga  Boots, 

118  "  Kip  Plow  Shoes, 

233  "  Misses'  Calf  Balmorals, 

211  "  Buff  Oxford  Shoes, 

141  "  Children's  Buff  Balmorals, 

38  "  Custom  Kip  Boots, 

38  "  Calf  Balmorals, 

26  "  Kip  Balmorals, 

45  boxes  Mason's  Challenge  Blacking, 


@ 


$3.50 
1.30 
2.50 
2.75 
2.00 
1.85 
1.80 
L65 
2.121 
1.30 
2.75 
3.35 
2.15 
.02i 


108 


MODERN    ACCOUNTANT 


CASH 


19— 

Petty 
Sales. 

SUNDS. 

ToT\L, 

Oct. 

1 

1 
1 

J.  B.  Campbell, 
C.  W.  Marshall, 

Balance, 
Investment, 
On  account, 

1500 
4 

25 

2466 

60 

1 

\/ 

Petty  Sales, 

Per  C.  D., 

18 

30 

1 

W.  F.  Johnson, 

On  account, 

20 

7 

V 

Petty  Sales, 

Per  C,  D., 

10 

60 

10 

R.  C.  Windsor, 

On  account. 

20 

11 

V 

Bills  Pay., 

Note  favor  Est.  Nat.  Bk. 

1000 

17 

Petty  Sales, 

Cash  Sales, 

4 

30 

23 

Geo.  W.  Simpson, 

On  account. 

10 

2i 

R.  C.  Windsor, 

On  account. 

15 

26 

\/ 

Petty  Sales, 

PerC.  D., 

42 

75 

27 

Bills  Rec, 

A.  W.  Green's  note. 

52 

02 

30 

C.  E.  Rogers, 

On  account. 

Total  Petty  Sales,  Cr., 

Total  Receipts, 

1 

17 

75 

75 
95 

2714 

97 

5181 

57 

1 

RESULTS,  OCTOBER  31,  19- 

Cash  on  hand $2925.71 

Bills  Payable  unpaid 1177.63 

Personal  Accounts  owing  us 727.48 

Personal  Accounts  we  owe 191.86 

A.    W.    Mason's  Net  Capital  at  closing 2745.71 

J.  B.  Campbell's  Net  Capital  at  closing 1556.95 

PETTY  SALES  COLUMN 

Wherever  the  nature  of  the  business  is  such  that  frequent  petty  cash  sales  are 
made,  each  of  which  must  be  entered  upon  the  Cash  Book,  it  is  often  expedient  to 
use  a  separate  column  on  the  debit  side  of  the  Cash  Book,  called  the  Petty  Sales 
column,  into  which  such  items  are  entered.  Check-mark  all  such  entries  as 
soon  as  made  on  the  debit  side  of  the  Cash  Book.  As  will  be  seen  by  reference  to 
the  above  form,  the  Petty  Sales  column  is  the  first  money  column  upon  the  debit 
side,  and  into  this  are  carried  all  petty  sales  of  merchandise.  At  the  end  of  the  month 
in  this  set  (or  at  the  end  of  each  day,  if  the  Cash  Book  is  closed  daily),  the  total 
amount  of  this  column  is  extended  into  the  Sundries  column,  where  it  is  added  in 
with  other  cash  receipts.  This  total  of  the  Petty  Sales  column  is  posted  to  the  credit 
of  Petty  Sales  account.  By  the  use  of  this  column  the  numerous  postings  of  small 
items  of  sales  are  avoided.  In  fact,  the  introduction  of  special  columns  in  all  cases 
is  to  avoid  the  necessity  of  posting  numerous  small  items.  Of  course,  as  petty  sales 
are  made  they  must  be  entered  in  the  Sales  Book  and  posted  as  heretofore.  Some 
bookkeepers  would  enter  all  sales  for  cash  in  this  special  column  and  in  the  vSales 
Book  as  well,  and  would  check  (instead  of  post)  both  entries,  but  this  is  not  the  prac- 
tice followed  by  the  best  houses. 


HOW  TO   ENTER  CASH    DISCOUNTS 
CASH 


109 


19- 

J.  Armstrong  &  Co., 

On  account, 

Cash  Dis. 

SUNDS. 

Total. 

Oct, 

3 

2 

79 

90 

21 

6 

Bills  Pay., 

Favor  J.  B.  Merriam, 

100 

6 

Int.  and  Dis., 

Above  note, 

** 

11 

Int.  and  Dis., 

On  note  favor  First 

Nat.  Bk., 

11 

67 

13 

Bills  Pav., 

Favor  Th.  Hamer, 

75 

13 

Int.  and  Dis., 

On  above  note, 

** 

15 

D.  B.  Bradshaw, 

Invoice  of  7th, 

o 

26 

110 

60 

15 

C.ill.  and  Ex., 

On  New  York  Draft, 

25 

17  1 

Bills  Pay., 

Favor  Union  Nat.  Bk., 

1600 

20 

J.  B.  Merriam, 

In  full  of  acct.. 

86 

20 

Coll.  and  Ex., 

On  Draft, 

50 

21 

CM.  Henderson  &  Co. 

Invoice  of  14th, 

89 

28 

75 

2i> 

Bills  Pay., 

Favor  J.  Armstrong 
&  Co., 

75 

2o 

Int.  and  Dis., 

On  above  note. 

** 

30 

Expense, 

Advertising  in  TheSjin 

16 

50 

30 

Expense, 

Rent  for  October, 
Total  Disct.  Cr., 

Total  Payments, 

60 

*»** 

5 

94 

** 

Balance, 

**** 

** 

5181 

57 

1 

i 

HOW  TO  ENTER  CASH  DISCOUNTS 

The  thrifty  merchant  "discounts  his  bills"  by  paying  them  before  due,  and  thus 
secures  the  extra  discount  allowed  by  wholesale  houses  for  prompt  payment,  called 
Cash  Discount.  (See  page  87.)  He  keeps  a  "Cash  Discount"  account  in  the  Ledger 
in  order  that  he  may  know,  at  any  time,  how  much  he  has  gained  by  discounting  his 
bills. 

There  are  three  methods  of  entering  cash  discounts:  1.  By  means  of  a  Journal 
entry,  debiting  the  person  or  firm  to  whom  the  bill  is  due,  and  crediting  Cash  Discount 
account.  2.  By  entering  in  the  Cash  Book  the  entire  amount  of  the  bill  upon  the 
credit  side,  and  the  cash  discount  upon  the  debit  side,  as  if  the  entire  amount  had 
been  first  paid  out  and  the  cash  discount  received  again  in  return.  This  follows  the 
method  of  entering  drafts  and  notes  discounted.  3.  By  using  a  column  for  cash  dis- 
counts upon  the  credit  side  of  the  Cash  Book  as  shown  in  the  above  form.  This 
method  is  the  one  which  seems  to  have  the  preference  among  practical  book- 
keepers. 

Whenever  a  bill  is  paid  upon  which  there  is  a  cash  discount,  enter  the  amount  of 
such  discount  in  the  Cash  Discount  column,  and  the  net  amount  paid  in  the  second 
column.  Post  both  of  these  items  to  the  debit  of  the  person's  account  separately, 
using  the  explanation,  To  Cash  Discount,  for  the  amount  of  such  discotmt. 

When  closing  the  Cash  Book,  foot  up  the  Cash  Discount  column,  but  do  not  extend 
the  total  into  the  Sundries  column,  as  it  is  7iot  inoiey  paid  out.  Post  the  total  of  the 
Cash  Discount  column  to  the  credit  of  Cash  Discount  account  in  the  Ledger.  The 
several  items  in  the  Cash  Discount  column  having   been  posted  to  the  debit  of  the 


110 


19— 
Oct. 


14 


29 


:50 


MODERN    ACCOUNTANT 
JOURNAL-DAY  BOOK 


W.  Mason  has  this  day  admitted  J.  B.  Campbell  as 
a  partner  in  the  business,  the  gains  and  losses  to 
be  shared  as  follows:  A.  W.  Mason  -^,  J.  H.  Camp- 
bell I'i.  J.  B.  Campbell  invests  cash  $1500,  and 
pays  Mason  $500  for  one-third  of  the  good-will  of 
the  concern. 


Mdse., 
Mdse., 
Mdse., 


J.  Armstrong  &  Co., 

For  goods  bought  as  per  bill. 


D.  B.  Bradshaw, 

For  goods  bought  as  per  bill. 


C.  M.  Henderson  &  Co., 

For  goods  bought  as  per  bill. 


Thompson  &  White, 

Shipment  to  Thompson  8c  White, 

For  amount  due  as  per  account  sales. 

J.  Mershon  &  Co., 

Bills  Rec, 

Gave  J.  M.  &  Co.  Morse's  note  on  acct. 


1 

93 

93 

112 

86 

112 

29 

64 

29 

284 

16 

284 

49 

84 

49 

86 


64 


16 


84 


various  personal  accounts,  when   the  total  of  this   column  is  posted  to  the  credit  of 
Cash  Discount  account  the  equilibrium  of  the  Ledger  is  restored. 


EXERCISE  XLIX 

To  the  Stiidoit:  Post  the  several  items  of  the  Sales  Book  to  the  debit  side  of  their 
respective  accounts.  Post  the  total  to  the  credit  side  of  Merchandise  account.  Post 
the  Journal  entries  in  the  usual  manner. 

Post  the  Cash  Book.  Debit  Side. — Post  the  total  of  the  debit  side  to  the  debit  of 
the  Cash  account  in  the  Ledger.  Post  the  total  of  the  Petty  Sales  column  to  the  credit 
of  the  Petty  Sales  account  in  the  Ledger.  The  remaining  items  are  credit  items  ^nd  are 
to  be  posted  to  the  credit  of  the  various  accounts.  Credit  Side. — Post  the  credit  side 
of  the  Cash  Book  first  by  posting  the  total  payments  to  the  Cash  account  in  the 
Ledger.  The  debit  items  are  as  follows:  J.  Armstrong  8c  Co.  have  two  debits,  and 
these  items  will  be  posted  as  follows  on  the  debit  side  of  their  account: 

Oct.  3.  Cash 890.21 

"    J,  Cash  dis 2.79 

Post  the  rest  of  the  items  as  per  instructions.  The  total  of  cash  discount  is  to  be 
posted  to  the  credit  of  that  account. 

Take  a  trial  balance  and  test  same  with  the  results  as  shown  on  page  108. 
Copy  the  inventory  as  usual. 


To  the  Strident: 
sheet. 


EXERCISE  L 

Close  the  Ledger  as  directed  for  August. 


Make  out  a  balance 


TRANSACTIONS  HI 

EXERCISE  LI 

To  the  St7(dcnt:  Write  up  the  Cash  Book,  Journal  and  Sales  Book  for  the  follow- 
ing transactions: 

Nov.  1,  19—.  Bought  of  H.  D.  Comstock  &  Co.,  New  York,  12  pr.  Custom  Kip 
Boots  at  $2.60,  $31.20;  8  pr.  Ladies'  Lasting  Balmorals  at  $1,121^,  $9.  Total  $40.20. 
10%  off,  $4.02.     Net  amount  of  invoice,  $36.18,  5%  off  for  cash  in  10  days.     In  J. 

Nov.  2.  Paid  Thomas  Hamer  in  full  of  account,  our  draft  on  L.  B.  Montonya 
8c  Co.  at  sight,  $**.**.     In  J. 

Nov.  3.     Received  cash  of  Geo.  W.  Simpson,  on  account,  $5.     In  C.  B. 

Nov.  4.  Sold  R.  C.  Windsor,  3  pr.  Farmers'  Kip  Boots  at  $3.15,  $*.**;  2  pr. 
Kip  Plow  ghoes  at  $2,  $*.     Total  $13.45.     In  S.  B. 

Nov.  5.     Petty  sales  per  cash  drawer,  $21.40.     In  C.  B. 

Nov.  6.  Remitted  our  check  on  the  Chemical  National  Bank  of  New  York  in 
settlement  of  H.  D.  Comstock  &  Co.  's  invoice  of  the  1st  inst. ,  less  cash  discount.   In  C.  B. 

Nov.  7.  Sold  to  J.  D.  Fielding  for  cash,  1  pr.  Custom  Kip  Boots,  $4.50.  In 
S.  B.  and  C.  B. 

Nov.  8.  Sold  to  D.  W.  Metcalf  for  cash,  1  pr.  Misses'  Calf  Balmorals,  $2;  1  pr. 
Buff  Oxford  Shoes,  $2.50.      Total  $4.50. 

Nov.  9.  Paid  cash  for  freight  and  dray  age  on  invoice  of  goods  received  from 
C.  H.  Fargo  &  Co.,  Chicago,  $4.19. 

Nov.  9.  Bought  of  C.  H.  Fargo  &  Co.,  Chicago,  8  pr.  Farmers'  Kip  Boots  at 
$2.50,  $20;  12  pr.  Calf  Balmorals,  $3,  $36;  20  pr.  Kip  Plow  Shoes  at  $1.80,  $36. 
Total  $92.     12>^%  and  5%  off. 

Nov.  10.  Sold  to  Geo.  W.  Simpson,  4  pr.Kip  Balmorals  at  $2.50,  $**;  2  pr.  Chil- 
dren's Buff  Balmorals  at  $1.75,  $*.**;  3  pr.  Boys'  Stoga  Boots  at  $2.25,  $*.**.  Total 
***  ** 

Nov.  11.      Received  cash  of  C.  H.  Dexter  in  full  of  account,  $*.**. 

Nov.  12.     Paid  clerk  hire  to  date,  $43.50. 

Nov.  12.     Paid  gas  bill  for  October,  $16.35. 

Nov.  13.  Paid  C.  H.  Fargo  &  Co.  cash  for  invoice  of  goods  received  on  the  9th, 
less  2%  cash  discount. 

Nov.  14.  Sold  to  J.  W.  Lunt,  2  pr.  Calf  Balmorals  at  $3.75,  $*.**;  4  pr.  Buff 
Oxford  Shoes  at  $2.50,  $**;  2  pr.  Farmers'  Kip  Boots  at  $3,  $*;  6  pr.  Men's  Thick 
Boots  at  $4,  $**.     Total  $47.50.     12>^%  and  5%  off,  $*.**.     Net  amount,  $**.**. 

Nov.  15.  Received  of  R.  C.  Windsor  his  check  on  a  Milwaukee  bank  in  settle- 
ment of  his  account,  $**.**.     Our  bank  charged  us  25^  exchange  on  this  check. 

Nov.  16.     Petty  sales  per  cash  drawer,  $13.58. 

Nov.  17.  Bought  of  Louis  Gould  &  Co.,  Philadelphia,  24  pr.  Ladies'  Kid  Sewed 
Balmorals  at  $2.50,  $60;  20  pr.  Boys'  Stoga  Boots  at  $2.80,  $56.  Total  $116.  Terms, 
30  days  or  5%  cash  10  days. 

Nov.  18.     Received  cash  of  J.  Riley  in  full  of  account,  $*.**. 

Nov.  20.  Remitted  Louis  Gould  &  Co.,  Philadelphia,  New  York  exchange,  in 
settlement  of  their  invoice  received  on  17th,  less  cash  discount. 

Nov.  21.     Received  cash  of  Geo.  W.  Simpson  on  account,  $20. 

Nov.  21.     J.  B.  Campbell  withdraws,  for  private  use,  cash,  $50. 

Nov.  22.     Sold  to  A.  W.   Dudley,   1  pr.  Boys'  Stoga  Boots,  $3.50;  2  pr.  Ladies' 


112 


MODERN    ACCOUNTANT 


Lasting  Balmorals  at  $2.25,  Sl-^O;  1  pr.  Ladies'  Kid  Sewed  Balmorals,  $3.  Total  $11. 
Received  in  part  payment,  cash,  $5. 

Nov.  23.      Petty  sales  per  cash  drawer,  $18.20. 

Nov.  24.     Paid  cash  for  Postage  Stamps,  $">. 

Nov.  25.  Received  of  Thompson  &  White  their  note,  dated  October  16th,  at  60 
days,  drawing  ^^jo  interest  for  amount  of  their  account,  $***.**.  Have  discounted 
this  note  at  First  National  Bank  at  7%.  Interest  to  maturity,  $*.**.  Discount  off, 
$*.**.     Proceeds  placed  to  our  credit,  $***.**. 

Journalize  the  note  first. 

Nov.  25.  Bought  of  J.  Armstrong  &  Co.,  12  pr.  Kip  Brogans  at  $2.25,  $27;  20 
pr.  Boys'  Stoga  Boots  at  $2.05,  $41;  10  pr.  Buff  Oxford  Shoes  at  $2.40,  $24.  Total 
$92.     5%  off.     Terms,  30  days,  or  2%  off  cash  10  days. 

Nov.  27.  On  checking  off  the  invoice  of  goods  received  from  J.  Armstrong  &  Co., 
we  find  a  damaged  pair  of  Buff  Oxford  Shoes.  We  return  them  and  charge  same  to 
their  account,  $2.40  less  5%. 

Nov.  27.  Remitted  to  J.  Armstrong  &  Co.,  Philadelphia,  bank  draft  in  settle- 
ment for  invoice  of  goods  just  received,  less  cash  discount. 

Nov.  28.     Received  of  R.  A.  Lambert,  cash  in  full  of  account,  $*.**. 

Nov.  29.     Sold  to  H.  C.  Parker  for  cash,  1  pr.  Buff  Oxford  Shoes,  $2.75. 

Nov.  29.     Received  of  A.  W.   Dudley  in  full  of  account,  cash,  $*. 

Nov.  29.     Petty  sales  per  cash  drawer,  $16.32. 

Nov.  30.      Paid  rent  of  store  for  November  in  cash. 


EXERCISE   LII 

To  the  SUident:     Post  transactions  to  the  Ledger  as  per  instructions  for  October. 
Take  a  trial  balance  and  compare  with  following 

RESULTS 

Cash  on  hand $3138.86 

Bills  Payable  unpaid, 1177.63 

Personal  Accounts  owing  us 166.55 

Personal  Accounts  we  owe 157.66 


INVENTORY  OF  PROPERTY  UNSOLD,  NOVEMBER  30,  19- 


28  pr.  Ladies'  Lasting  Balmorals, 

@ 

$1.20 

■  $  ** 

** 

50   *'     Ladies'  Kid  Sewed  Balmorals, 

@ 

2.50 

*** 

79   "     Farmers'  Kip  Boots, 

@ 

2.80 

*** 

** 

23   "     Boys'  Fine  Kip  Boots, 

@ 

2.25 

** 

** 

106    "     Boys'  Stoga  Boots, 

@ 

2.00 

*** 

136   "     Kip  Plow  Shoes, 

@ 

2.00 

*** 

232    "     Misses'  Calf  Balmorals, 

@ 

2.00 

*** 

215    "     Buff  Oxford  Shoes, 

@ 

2.10 

*** 

** 

139    "     Children's  Buff  Balmorals, 

@ 

1.50 

*** 

** 

39    "     Custom  Kip  Boots, 

@ 

2.75 

*** 

** 

48    "     Calf  Balmorals, 

@ 

3.50 

*** 

22   "     Kip  Balmorals, 

@ 

2.10 

** 

*» 

12    "     Kip  Brogans, 

@ 

2.25 

** 

45  boxes  Mason's  Challenge  Blacking, 

@ 

.021 

* 

*3 

Unpaid  Clerk  Hire  for  month  (Liability), 

36 

75 

FRICE   LISTS 
EXERCISE   LIII 


113 


To  the  Student:  Close  the  Ledger  as  directed  for  September.  The  unpaid  clerk 
hire  will  be  entered  as  a  liability  inventory  on  the  debit  side  of  Expense  account 
and  be  brought  down  as  a  credit  balance  when  that  account  is  closed. 

Compare  with  following  results  and  make  out  a  balance  sheet: 

A.  W.  Mason's  net  capital  at  closing $2792.27 

J.  B.  Campbell's  net  capital  at  closing 1530.23 

Business  Papers  required  for  October  and  November: 

Letter,    Envelope    and    Draft    of    October    15.      The   draft  is   drawn   by  the 
First  National  Bank  of  Chicago  on  the  Park  National  Bank  of  New  York. 
Letter,  Envelope  and  Check  of  November  6. 

PRICE  LIST  FOR  OCTOBER  AND  NOVEMBER 

The  prices  given  in  the  following  lists  may  be  substituted  for  those  given  in  the 
foregoing  transactions  if  desired,  in  which  case  the  results  should  correspond  with 
those  following  these  price  lists. 

The  price  list  of  the  same  number  must  be  used  for  October  and  November  as 
was  used  in  August  and  September,  as  the  business  is  simply  a  continuation.  Thus, 
if  the  student  has  used  Price  List  No.  1  in  August  and  September,  he  can  not  now 
adopt  No.  3  as  his  prices  for  October  and  November.  This  would  produce  incorrect 
results. 

Before  commencing  to  work  the  months  of  October  and  November  under  these 
price  lists,  the  student  should  copy  off  upon  a  sheet  of  paper,  the  names  of  the  articles 
and  the  buying  and  selling  prices  of  the  list  which  he  expects  to  use,  thus  separating 
this  price  list  from  the  others  and  avoiding  the  liability  of  confusion  and  error. 


ARTICLES. 


Boys'  Fine  Kip  Boots 

Boys'  Stoga  Boots 

Buff  Oxford  Shoes 

Calf  Balmorals 

Children's  Buff  Balmorals.. 

Custom  Kip  Boots 

French  Calf  Pegged  Boots. 

Farmers'  Kip  Boots 

Kip  Plow  Shoes 

Kip  Balmorals 

Kip  Brogans 

Ladies'  Lasting  Balmorals. 
Ladies'  Kid  Sewed  Balmorals 

Men's  Thick  Boots 

Misses'  Calf  Balmorals 

Mason's  Challenge  Blacking 


BUYING  PRICES  FOR  OCT.  AND  NOV. 

SELLING 

List  1. 

2 

3 

4 

5 

List  1. 

$2.25  pr. 

$2.50 

$2.30 

$2.40 

$2.35 

$2.60  pr. 

1.75  pr. 

1.80 

2.00 

1.85 

1.80 

2.25  pr. 

2.00  pr. 

1.90 

2.10 

2.15 

2.20 

2.50  pr. 

3.00  pr. 

3.25 

3.50 

3.25 

3.25 

3.50  pr. 

1.25  pr. 

1.40 

1.50 

1.40 

1.50 

2.00  pr. 

2.00  pr. 

2.25 

2.50 

2.50 

2.50 

2.50  pr. 

4.00  pr. 

4.25 

4.00 

4.10 

4.15 

4.50  pr. 

2.75  pr. 

2.75 

3.00 

3.25 

3.00 

3. 25  pr. 

1.75  pr. 

1.80 

2.00 

2.00 

L75 

2.25pr. 

2.00  pr. 

2.25 

2.00 

2.25 

2.00 

2.50  pr. 

2.00  pr. 

2.10 

2.25 

2.50 

2.75 

2.50  pr. 

1.80  pr. 

2.00 

2.00 

2.00 

L85 

2.25  pr. 

2.25  pr. 

2.30 

2.40 

2.50 

2.25 

3.00  pr. 

3.00  pr. 

3.25 

3.50 

3.40 

3  25 

3.50  pr. 

1.80  pr. 

2.00 

2.00 

1.85 

2.10 

2.25  pr. 

.02  bx. 

.02 

.02 

.021 

.025 

.05  bx. 

B2.75 
2.25 
2.40 
3.75 
2.00 
2.75 
4.75 
3.25 
2.25 
2.50 
2.60 
2.50 
2.75 
3.75 
2.50 
.05 


$2.80 
2.25 
2.60 
4.00 
2.00 
3.00 
4.50 
3.50 
2.40 
2.75 
2.75 
2.50 
3.00 
4.00 
2.50 
.05 


$3.00 
2.50 
2.75 
4.00 
2.00 
3.00 
4.60 
3.75 
2.50 
2.75 
3.00 
2.50 
3.00 
4.00 
2.35 
.05 


$3.00 
2.40 
2.75 
4.00 
2.00 
3.00 
4.75 
3.50 
2.25 
2.75 
3.25 
2.25 
2.75 
3.75 
2.60 
.05 


In  computing  interest  on  notes  or  drafts,  and  also  in  reckoning  the  amoiints  of 
bills  of  goods,  add  one  cent  when  the  fraction  equals  or  exceeds  five  mills.  If  less 
than  five  mills,  reject  it. 


114 


MODERN    ACCOUNTANT 
RESUIiTS  FOR  OCTOBER 


Cash  on  hand 

Bills  Payable  unpaid 

Personal  Accounts  receivable 
Personal  Accounts  payable... 
A.  W,  Mason's  net  capital. . . 
J.  B.  Campbell's  net  capital. . 


List  1. 


$3009.40 

1177.63 

708.29 

73.36 

2805.59 

1629.76 


$.3069.32 

1177.63 

737.41 

50.75 

2945.73 

1695.82 


$3102.02 

1177.63 

747.35 

71.87 

3056.09 

1731.98 


$3023.86 

1177.63 

743.06 

87  08 
2957.17 

1704.87 


$2960.90 

1177.63 

730.07 

82.35 

2920.30 

1682.82 


RESULTS   FOR  NOVEMBER 


Cash  on  hand 

Bills  Payable  unpaid 

Personal  Accounts  receivable 
Personal  Accounts  payable. . . 
A.  W.  Mason's  net  capital  . . . 
J.  B.  Campbell's  net  capital 


List  1. 


$3235.48 

1177.63 

180.89 

52.05 

2790.09 

1564.25 


$3302.34 

1177.63 

201.27 

36.15 

2928.77 
1628.86 


$3326.40 

1177.63 

201.68 

56.40 

3039.73 

1665.62 


$3249.80 

1177.63 

195.78 

67.60 

2941.94 

1639.64 


$3186.86 

1177.63 

192.65 

65.55 

2904.16 

1616.68 


CORRECTION  OP  ERRORS 


Of  all  rules  with  references  to  errors,  the  best  rule  is  to  avoid  them  entirely;  but 
as  it  often  happens  that,  notwithstanding  the  greatest  care  has  been  exercised,  errors 
will  creep  in,  it  may  be  well  to  offer  a  few  suggestions  as  to  the  best  mode  of  correct- 
ing them. 

The  student  who  really  aspires  to  any  proficiency  in  accountantship  should  early 
learn  to  rely  on  himself,  and  should  be  made  to  feel  that  he  is  responsible  for  the 
errors  which  he  commits,  and  he  alone  must  discover  and  correct  them.  The  teacher's 
sphere  is  to  instruct  in  the  principles  and  mode  of  procedure,  and  when  he  oversteps 
this  and  attempts  to  perform  the  student's  work  for  him,  he  not  only  does  the  student 
a  positive  injury  by  lessening  his  self-reliance,  but  at  the  same  time  multiplies  the 
sources  of  future  annoyance. 

In  searching  for  an  error  and  correcting  it,  the  student  has  brought  to  mind  the 
principles  of  bookkeeping  and  their  application  to  each  transaction.  He  studies  the 
relations  of  the  different  books,  and  the  whole  subject  is  reviewed  in  his  mind,  so  that 
when  the  error  is  discovered  he  sees  how  and  why  it  occurred,  and  is  able  in  future 
to  avoid  or  guard  against  such  pitfalls. 

The  correction  of  errors  in  books  of  original  entry,  and  in  books  of  subsequent 
entry,  are  governed  by  two  different  rules.  In  books  of  on gijial  entry  the  error  must 
not  be  corrected  in  any  manner  which  will  impair  the  record,  or  raise  a  doubt  as  to  its 
truthfulness.  No  erasures  or  alterations  of  words  or  figures  are  allowable.  In  books 
of  stibscquent  entry,  however,  the  general  rule  is  that  the  error  may  be  corrected  in  any 
manner  which  will  not  violate  taste  or  destroy  the  neatness  of  the  page.  The  reason 
of  these  two  rules  rests  upon  the  fact  that  in  cases  of  dispute,  books  of  original  entry 
are  accepted  as  evidence  of  the  truth,  while  any  book  which  is  a  copy  of  another  is 
not  admissible  in  evidence. 

DAY  BOOK 

Since  this  is  a  book  of  original  entry,  and  the  only  kind  admissible  as  evidence 
in  a  court  of  law,  great  care  should  be  exercised  in  making  corrections  in  it,  lest  we 
destroy  or  impair  its  credibility.  Erasures  and  interlineations  are  not  to  be  tolerated 
in  this  book,  as  they  tend  to  cast  suspicion  upon  the  record.  No  alterations  or  addi- 
tions to  an  entry,  after  it  has  been  once  made,  are  allowable  in  this  book.  If  an  error 
is  discovered,  it  must  be  corrected  in  such  a  manner  as  to  leave  the  original  entry 
undisturbed  and  still  legible  in  words  and  figures.  The  erroneous  entry  may  be 
marked  "void,"  "corrected  page — ,"  giving  the  page  where  the  correct  entry  may 
be  found;  or,  instead  of  marking  it  "void,"  we  may  draw  light  red  lines  through  it, 
so  as  to  destroy  the  entry  without  rendering  it  illegible,  and  then  make  a  reference 
to  the  page  where  the  corrected  entry  may  be  found.     The  correct  entry  should  also 

115 


116  MODERN    ACCOUNTANT 

contain  a  reference  to  the  erroneous  entry,  so  that  no  misunderstanding  may  ever 
arise.  If  the  error  is  not  discovered  until  after  it  is  posted,  it  may  be  necessary  to 
make  another  Day  Book  entry  to  Correct  the  wrong  entry  in  the  Ledger,  unless  it 
can  be  rectified  according  to  the  directions  given  under  that  head. 

If  the  error  consists  in  the  omission  of  an  item  or  items,  and  does  not  invalidate 
the  part  already  entered,  the  error  may  be  corrected  by  an  additional  entry  referring 
by  date  and  page  to  the  other  part  of  the  entry,  made  in  such  a  manner  as  will  ren- 
der the  entire  transaction  clear.  The  above  rules  or  directions  will  apply  to  other 
books  of  original  entry  as  well  as  the  Day  Book. 

JOURNAL 

If  an  error  is  discovered  in  this  book  before  posting,  which  can  be  corrected 
without  seriously  marring  the  appearance  of  the  page,  the  necessary  erasures  and 
corrections  may  be  made.  If  such  erasures  would  seriously  damage  the  appearance 
of  the  book,  it  is  better  to  mark  it  "void,"  in  the  margin,  and  refer  to  the  "corrected 
page,"  where  the  proper  entry  may  be  found,  which  should  always  refer  back  by 
date  and  page  to  the  "void"  entr5^  If  the  error  is  not  discovered  until  after  it  has 
been  posted,  it  can  be  corrected  only  by  a  new  entry  of  sufficient  amount  to  neutral- 
ize the  error  in  the  Ledger  and  produce  the  correct  result;  or  two  entries  may  be 
made — one  to  neutralize  the  error,  and  the  other  to  represent  the  entry  as  it  should 
have  been  made. 

LEDGER 

This  is  the  book  which  affords  the  test  of  an  accountant's  neatness.  Want  of 
taste  and  carelessness  in  this  book  should  be  severely  condemned,  and  hence  great 
care  should  be  exercised  in  the  correction  of  errors,  not  to  mar  or  deface  the  general 
appearance  of  the  book.  If  a  wrong  sum  has  been  posted  to  a  wrong  account,  or  to 
a  wrong  side  of  a  proper  account,  reduce  the  figures  carefully  to  zeros  and  then  post 
the  entry  correctly.  If  an  entry  has  been  duplicated,  correct  as  above  indicated 
instead  of  making  a  contrary  entry.  If  an  entry  has  been  omitted,  post  as  soon  as 
discovered,  inserting  the  date  of  posting  in  the  date  column,  and  placing  the  date  of 
the  entry  in  the  title  colupin  directly  before  the  column  containing  the  post-mark. 
Drawing  light  red  lines  through  the  figures  of  entries  in  the  Ledger  is  an  acceptable 
method  of  destroying  the  debit  or  credit,  if  neatly  done. 

TRIAL   BALANCE 

Errors  in  the  Trial  Balance,  while  a  source  of  great  annoyance  to  bookkeepers, 
are  subject  to  a  few  rules  worth  remembering.  First.  Be  sure  that  there  is  an 
error.  Second.  If  the  error  should  be  in  one  figure,  as  10,  200  or  5,000,  it  is  probably 
an  error  in  addition.  Third.  If  the  error  is  an  even  number,  examine  the  Journal 
or  Cash  Book  for  a  sum  equal  to  one-half  the  error,  since  a  posting  to  the  wrong  side 
always  produces  a  discrepancy  of  twice  the  amount.  The  most  potent  rule  for  detect- 
ing errors  in  Trial  Balances  is  checking  the  books,  as  explained  on  page  37.  Many 
bookkeepers  pursue  the  plan  of  always  checking  the  Ledger  immediately  after  the 
posting  is  finished  and  before  attempting  the  Trial  Balance,  to  make  certain  that  it 
is  in  balance.  This  may  sometimes  be  a  useless  labor,  but  in  many  other  cases  it 
saves  the  annoyance,  disappointment  and  vexation  of  not  getting  the  Trial  Balance 
off  the  first  time.       This  plan  also  detects  any  error  which  the  Trial  Balance  will  not 


STATEMENTS 


117 


disclose,  such  as  a  posting  to  the  same  side  of  a  wrong  account,  or  two  errors,  one  of 
which  equalizes  the  other,  and  hence  is  a  valuable  method,  and  one  which  is  com- 
mended to  the  young  bookkeeper.  In  checking  a  Ledger,  make  the  check-mark 
with  pencil,  small,  and  upon  the  margin  of  the  money  column. 


Foiw^^jJL 


STATEMENT 


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30  Days  Net. 


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consider  t^fis  a  request /or pav^ncfd  of  dills  rwiyetmalitred.  Should^rcTi/Ttreceii^c 

(tremd/ance  befom  (kC' "^         we  wiU  dmironj^u  /or. 

i7/u?-s  vetjrlru^ 
GUTHMANN.  CARPENTER  &  TELLING. 


-^ 


118  MODERN    ACCOUNTANT 

Having  performed  the  above  labor  in  the  most  careful  manner,  and  added  the 
Trial  Balance  with  the  most  perfect  accuracy,  it  may  yet  declare  an  error.  In  this 
event,  we  must  examine  carefully  the  balances  brought  down  from  the  previous 
month.  Perhaps  some  balance  is  incorrect,  or  not  brought  down,  or  carried  down 
improperly,  causing  the  disagreement.  After  a  Ledger  is  closed,  the  bookkeeper 
should  immediately  take  a  trial  of  all  balances  brought  down  to  ascertain  whether 
they  are  in  balance,  thus  avoiding  the  liability  of  any  error  in  this  particular.  After 
the  trial  balance  is  taken  off,  go  over  the  Ledger  and  carefully  erase  all  check-marks. 

MONTHLY  STATEMENTS 

Promptly  on  the  first  of  each  month  the  merchant  sends  to  each  of  his  debtors  a 
Statement  of  Account,  showing  the  dates  and  amounts  of  purchases  during  the  past 
month.  If  bills  were  rendered  to  the  customer  at  the  time  of  purchase,  then  the 
statement  will  not  contain  a  detailed  list  of  the  articles,  but  only  dates  and  total 
amounts  of  the  bills  if  "J/c/jr.,"  the  same  as  the  form  of  statement  shown  herein.  In 
case  it  is  not  customary  to  render  bills  at  the  time  of  sale,  the  articles  and  price 
of  each  must  be  enumerated  in  the  Monthly  Statement. 

Payments  made  during  the  month,  goods  returned  or  shortages  are  entered  upon 
the  statement  below  the  purchases  under  the  head  Cr.  or  Contra,  and  these  should 
correspond  with  the  credit  side  of  the  customer's  account  in  the  Ledger. 

The  energetic  bookkeeper  will  have  his  statements  out  and  mailed  to  customers 
promptly  on  the  first  of  each  month.  Some  houses  mail  them  on  the  last  day  of  the 
month  so  that  they  will  reach  customers  on  the  first  of  the  following  month.  Prompt- 
ness in  presenting  statements  makes  their  collection  easier,  and  this  is  highly  impor- 
tant in  the  Conduct  of  business. 

QUESTIONS  FOR  REVIEW 

1.  How  are  Checks,  Sight  Drafts  received,  Postal  and  Express  Money  Orders  entered?  2.  When 
is  it  propsr  to  balance  and  rule  up  personal  accounts?  3.  What  should  be  the  character  of  the  lan- 
guage of  a  Day  Book  entry?  4,  Why  is  this  book  admissible  as  evidence  in  a  court  of  justice? 
5.  How  do  you  abbreviate  the  entry  in  the  case  of  purchases  and  sales?  0.  How  should  entries  be 
made  which  can  not  be  readily  abbreviated?  7.  To  what  book  or  books  are  the  entries  carried  from 
the  Cash  Book  in  retail?  8.  Wherein  does  the  Cash  Book  differ  from  the  Cash  account  in  the 
Ledger?  9.  What  entries  are  ]jlaced  on  the  Dr.  side?  10.  What  entries  are  placed  on  the  Cr.  side, 
and  how?  11.  How  should  the  entry  be  made  in  case  a  Note  or  Draft  is  discounted?  12.  To  what 
other  book  besides  the  Cash  Book  are  the  entries  from  the  Daj'  Book  transferred?  Y.\.  How  is  the 
Journal  entry  made  in  case  of  a  purchase  or  sale  when  onl}'  part  is  paid?  14.  What  is  the  object 
sought  in  first  making  the  entry  as  if  nothing  had  been  paid,  and  then  entering  the  payment?  15.  If 
a  statement  is  rendered  to  a  customer,  what  should  it  show?  16.  As  the  entries  are  carried  from 
the  Day  Book  to  the  Journal  or  Cash  Book,  how  is  such  transfer  indicated  in  the  Day  Book? 
17.  When  the  entries  in  the  Journal  and  Cash  Book  are  posted  to  the  Ledger,  what  record  of  such 
transfer  is  made?  18.  What  record  does  the  Cash  Book  contain?  19.  Of  how  many  parts  may  each 
entry  in  the  Cash  Book  be  said  to  consist?  20.  What  is  the  first  part?  21.  What  is  the  second? 
22.  What  is  the  third  part,  how  should  it  be  expressed,  and  how  written?  2."].  Where  should  all 
explanations  in  a  Cash  Book  begin?  24.  What  is  the  fourth  part,  and  where  should  it  be  placed? 
25,  Where  are  items  found  on  the  Dr.  side  of  the  Cash  Book  posted,  and  how?  26.  Where  are  the 
items  on  the  Cr.  side  of  the  Cash  Book  posted,  and  how?  27.  Where  are  the  total  receipts  posted, 
and  how?  28.  Where  are  the  total  payments  posted,  and  how?  29.  How  often  is  it  customary  to 
c  ose  the  Cash  Book  where  considerable  cash  is  handled?  30.  What  should  the  balance  of  the  Cash 
Book  agree  with?  31.  In  closing,  where  are  the  total  receipts  and  total  payments  placed  in  the  Cash 
Book?     32.  How  is  the  balance  entered?     33.  How  is  it  brought  down,   and  where  is  it  placed? 


REVIEW  QUESTIONS  -  ^q 

'M.  Why?  35.  What  is  the  nature  of  the  ruling  in  the  Cash  Book?  30.  What  is  the  necessity  for 
care  in  keeping  the  Cash  Book?  37.  What  is  the  object  of  making  explanations  to  entries  in  the 
Journal?  38.  How  should  such  explanations  be  written?  3!».  What  does  the  Journal  become  if  kept 
in  this  manner  and  entries  are  first  made  in  it?  40.  What  is  the  object  of  keeping  a  Sales  Book  in 
this  set?  41.  What  is  entered  in  the  Sales  Book?  42.  Is  the  Sales  Book  in  this  set  a  book  of  orig- 
inal entry?  43.  Why?  44.  Is  it  a  principal  book?  45.  Why?  4().  What  is  the  object  of  the  Petty 
Sales  column  in  the  Cash  Book?  47.  Where  is  the  total  of  this  column  posted?  48.  What  is  the 
use  of  the  Cash  Discount  column  in  the  Cash  Book?  49.  In  how  many  ways  may  Cash  discounts  be 
entered  in  business?  '  50.  Give  them.  51.  How  is  the  entry  made  where  a  Cash  Discount  column  is 
used  as  in  this  set?  52.  Where  is  the  total  of  the  Cash  Discount  column  posted?  53.  Why?  54.  Is 
the  total  of  the  Cash  Discount  column  extended  into  the  Sundries  column,  the  same  as  Merchandise 
column?  55.  Why?  56.  What  is  the  general  rule  in  regard  to  the  correction  of  errors  in  books  of 
original  entry?  57.  What  is  the  general  rule  in  regard  to  the  correction  of  errors  in  books  of  subse- 
quent entry?  58.  Give  the  reasons  upon  which  the  two  foregoing  rules  are  based.  59.  Why  is  it 
advisable  to  check  the  Ledger  before  attempting  to  take  the  Trial  Balance? 


RETAIL 

Adapted  to 

Grocery  Stores,  Markets  and  Shops 

DOUBLE    ENTRY* 
Books  Used:    Order  Book,  Cash  Book,  Journal-Day  Book  and  Retail  Ledger 

ORDER  BOOK 

This  is  a  small  book  of  long  and  narrow  proportions,  made  of  cheap  material, 
and  known  by  some  dealers  as  the  "Counter Book,"  into  which  the  orders  are  entered 
as  they  are  received.  If  the  goods  are  paid  for  at  the  time  they  are  ordered,  the 
entry  is  marked  ''Paid'''  in  the  margin;  otherwise  it  is  posted  to  the  person's  account 
in  the  Ledger  at  the  close  of  the  day.  As  the  articles  are  "put  up"  for  delivery, 
they  are  checked  off  in  the  margin  of  the  Order  Book.  Where  the  business  is  large, 
several  Order  Books  are  necessary  in  order  that  the  bookkeeper  may  be  accommo- 
dated and  the  Order  Books  are  numbered  1,  2,  3,  etc.,  and  used  alternate*ly  by  the 
bookkeeper  and  salesmen.  Where  it  is  customary  for  the  salesman  to  visit  his  cus- 
tomers and  receive  their  orders  at  their  homes,  he  carries  an  Order  Book  with  him 
for  the  purpose. 

This  Order  Book  is  a  book  of  original  entry  for  sales  of  merchandise,  and  might 
properly  be  considered  a  Sales  Book. 

Instead  of  using  the  Order  Book  as  above  described,  many  houses  now  use  the 
duplicate  order  sheet.  By  means  of  a  carbon,  two  sheets  are  made  out  at  the  same 
time — one  for  the  accounting  section  and  the  other  for  the  shipping  department, 
which  latter  is  sent  to  the  purchaser  with  the  goods. 

If  the  purchase  is  for  cash  and  the  goods  are  taken  by  the  customer,  a  small 
double  ticket  is  filled  out,  one  going  to  the  cashier  with  the  money  and  the  other 
remaining  as  a  stub  in  the  ticket  book.  These  tickets  are  totaled  and  reported  by 
the  sales  clerk  at  the  end  of  the  day,  thus  affording  an  opportunity  to  test  the 
accuracy  of  the  cash  receipts  as  reported  by  the  cashier. 

DAY  BOOK-JOURNAL 

This  book  needs  no  particular  explanation,  as  its  features  have  already  been 
detailed.  All  purchases  of  goods  will  be  entered  in  this  book  and  such  other  entries 
as  do  not  properly  belong  to  the  other  books. 

CASH  BOOK 

In  the  retail  business  cash  discounts  are  received  but  are  not  given  and  as  a  rule 
the  frequency  of  entries  involving  them  does  not  justify  a  special  column  in  the  Cash 
Book.  There  are,  however,  many  small  payments  for  expense  items  and  these  are 
best  cared  for  by  a  special  column.  The  Cash  Book  in  this  set  is  therefore  one  of  two 
columns  on  the  debit  and  three  on  the  credit.  The  special  column  on  the  credit  is  the 
first  one  and  is  for  all  expenditures  for  Expense.  The  footings  are  to  be  posted  to 
the  debit  of  Expense  account. 

*For  instructions  to  write  up  this  set  as  a  Single  Entry  set,  see  page  127. 

120 


THE  LEDGER 


121 


IiEDaEB 

In  the  retail  trade,  where  a  credit 
business  is  carried  on,  unless  the  "pass 
book"  system  is  used,  it  is  necessary 
at  stated  intervals,  usually  on  the  first 
of  each  month,  to  render  to  customers 
an  itemized  statement  of  the  purchases 
made  during-  the  month,  with  the  cred- 
its or  payments,  if  any,  thereon.  In 
order  to  do  this  with  facility  and  avoid 
having  to  refer  back  to  the  book  of  orig- 
inal entry  (in  this  case  the  Order  Book) 
for  the  items,  it  is  essential  that  the 
sales  should  be  itemized  in  the  Ledger; 
and  since  the  ordinary  Ledger  affords 
insufficient  space  for  this  purpose,  a 
more  suitable  one  is  the  one  known  as 
the  Retail  Ledger,  one  having  three 
columns — two  debit  and  one  credit  col- 
umn. By  reference  to  the  illustration 
on  page  122  of  the  Ledger  page  herein 
explained,  it  will  be  seen  how  readily 
a  statement  of  account  may  be  made 
up  without  reference  to  any  other 
book.  The  folio  of  the  Order  Book  or 
Day  Book  may  be  entered  in  the  folio 
column  of  the  Ledger,  and  the  page  of 
the  Ledger  entered  in  the  Order  Book 
or  Day  Book,  as  a  convenience  in  case 
of  reference. 

The  left-hand  column  is  for  debit 
items;  the  second  for  totals,  and  the 
right-hand  column  for  credits.  Thus, 
when  goods  are  sold  they  are  charged  to 
the  customer  by  entering  them  in  the 
first  or  left-hand  column,  and  the  total 
of  the  sale  is  carried  to  the  second  col- 
umn. Goods  returned,  cash  paid,  etc., 
are  credited  to  the  customer's  account 
by  entering  in  the  right-hand  column. 
When  the  account  balances  it  is  ruled 
up  in  the  usual  manner. 


ORDER  BOOK 
October  2,  19— 


John  F.  Brooks,  187  Warren  Ave. 

n'' 

1  bbl.  W.  W.  Flour, 

6. 

V 

10  It)  C.  Meal,                            .03 

.30 

n' 

4  gal.  M.  Molasses,                 .75 
John  Baldwin,  3()0  Center  St. 

3. 

9 

30 

V' 

4  lb  Gran.  Sugar,                     .13 

.52 

V 

(i  "  Raisins,                        •       .23 

1.38 

V 

8  "  Butter,                              .30 
Mrs.  James  W.  Haines,  25  Cornell 

2.40 

4 

30 

Ave. 

V 

2  pk.  Apples,                            .45 

.90 

V 

2  bu.  Potatoes,                        .75 

L50 

V 

2  gal.  C.  Vinegar,                    .42 

.84 

V 

5  R)  C.  Fish,                              .08 
S.  G.  Olmstead,  187  Madison  Ave. 

.40 

3 

64 

V 

2  lb  Butter,                                .30 

.60 

V 

3  "  D.  Apples,                         .09 

.27 

\'' 

5  "  Lard,                                  .14 

.70 

\; 

2  doz.  Eggs,                              .18 

.36 

\' 

8  tb  Cheese,                               .25 

2. 

V 

2sk.  T.  Salt,                            .10 

.20 

V 

8  Yb  A.  C.  Sugar,                     .12^ 

1. 

\' 

2  '^  J.  Tea,                                .62 

L24 

v 

2  "  Soda,                                   .08 
October  3,  ]9— 

.16 

6 

53 

Mrs.  G.  W.  Hughes,  45  Willow  St. 

V 

6  ft  Butter,                                .35 

2.10 

f^ 

^  bu.  Onions,                         1.50 

.75 

V 

4  Cabbages,                                .15 

.60 

\'' 

3  It)  Honey,                               .35 
John  F.  Brooks,  187  Warren  Ave. 

L05 

4 

50 

\' 

}i  bu.  Beans,                           2. 

.50 

V 

}(    "    Peas,                              3. 

.75 

\ 

1  qt.  Oysters, 

.40 

\ 

3  It)  Prunes,                               .10 
S.  G.  Olmstead,  187  Madison  Ave. 

.30 

1 

95 

\' 

3  tb  O.  G.  Java  Coffee,           .30 

.90 

V 

2  doz.  Eggs,                              .20 

.40 

v' 

8  tb  M.  Sugar,                          .24 

1.92 

V 

2  Chickens,  14  lb,                    .20 

2.80 

6 

02 

122 


MODERN    ACCOUNTANT 
JOHN  BALDWIN 


860  Center  Street 


19— 
Oct. 


1  bhl.  W.  W.  Flour, 
10  II.  C.  Meal,  3(t 

4  gal.  M.  Molasses,  75^ 
8  lb  Butter,  30'/ 


19— 

6 

30 

Oct. 

5 

3 

4 

2 

40 

11 

70 

Cash, 


S.  G.  OLMSTEAD 


10 


187  Madison  Ave. 


19— 
Oct. 


2  lb  Butter,    •  30 f 

3  "  D.  Apples,  9^ 
5  "  Lard,                    14^* 


60 

27 
70 


To  the  Student:  Write  up  the  records  for  the  following  transactions.  At  first 
each  transaction  is  followed  by  a  set  of  letters  indicating  the  books  in  which  the 
record  is  to  be  made. 

LEDGER  HEADINGS 

The  following  accounts  should  each  have  one-third  page:  (Student),  Franklin 
McVeagh  &  Co.,  Jevne  &  Co.,  A.  H.  Revell  &  Co.,  James  C.  Anderson,  Andrew 
Bailey,  David  Haskell.     Give  Mdse.  two-thirds  page. 

The  following  accounts  should  each  have  an  entire  page:  John  F.  Brooks,  187 
Warren  Ave.,  John  Baldwin,  360  Center  St.,  Mrs.  James  W.  Haines,  25  Cornell  Ave, , 
S.  G.  Olmstead,  187  Madison  Ave.,  Mrs.  G.  W.  Hughes,  45  Willow  St.,  Mrs.  Geo.  C. 
Lewis,  317  Fulton  St.,  Mrs.  W.  N.  Jewett,  185  Ohio  St.,  Mrs.  H.  C.  Dement,  164 
Taylor  St.,  L.  B.  Pierce,  243  Hammond  St.,  Mrs.  H.  W.  Simpson,  180  No.  Fifth  St., 
Mrs.  Henry  AV.  Seymour,  446  Greenwood  St. 

For  the  following  accounts  devote  one-fourth  page  each:  Cash,  Expense,  Fix- 
tures, Horse  and  Wagon,  Bills  Payable,  Insurance,  Cash  Discount,    Profit  and  Loss. 

TRANSACTIONS 

Oct.  1,  19 — .  I  (here  enter  your  name)  have  this  day  commenced  the  retail  gro- 
cery business  with  a  cash  capital  of  $3000.     Enter  in  C.  B.  and  L. 

Oct.  1.  Bought  the  following  bills  of  goods:  From  Franklin  MacVeagh  &  Co., 
Chicago,  a  bill  of  Groceries  amounting  to  $750;  terms,  3%  10  days,  20  days  net. 
D.  B.-J.  and  L.  From  Jevne  &  Co.,  Chicago,  a  bill  of  Groceries  amounting  to 
$954.60;  terms,  2%  10  days,  30  days  net.  D.  B.-J. 
Co.,  Chicago,  Fixtures  for  store  amounting  to  $400. 
to  apply  on  bill  of  Fixtures.     C.  B.  and  L. 

Oct.  1.  Rented  Store  from  E.  B.  Stone  &  Co. 
per  month.  Gave  cash  $41.67  for  one-half  of  first  month's  rent  in  advance,  balance 
due  and  payable  at  end  of  month.  C.  B.  Bought  for  cash,  Horse,  Harness  and 
Wagon,  $240.     C.  B.  and  L. 

Oct.  2.  Sales  on  credit  this  day  are:  John  F.  Brooks,  187  Warren  Ave.,  1  bbl. 
W.  W.  Flour,  $6;  10  lb  Corn  Meal  at  3r/;  4  gal.  M.  Molasses  at  75^'.  John  Baldwin, 
360  Center  St.,  4  lb  Gran.  Sugar  at  13^/-;  6  tb  Raisins  at  23^-;  8  R)  Butter  at  30^.  Mrs. 
James  W.  Haines,  25  Cornell  Ave.,  2  pk.  Apples  at  45^/;  2  bu.  Potatoes  at  75<;/5;  2  gal. 
C.  Vinegar  at  42^;  5  lb  C.  Fish  at  8^.     S.  G.  Olmstead,  187  Madison  Ave.,  2S)  But- 


and  L.       From  A.  H.  Revell  & 
D.  B.-J.  and  L.      Paid  cash  $300 

agents,   for  6  months  at  $83.33 


TRANSACTIONS  123 

ter  at  30^;  3  Hb  Dried  Apples  at  Or/;  51b  Lard  at  14^-;  2  doz.  Eggs  at  18^';  81b  Cheese 
at  2o<t\  2  sacks  Table  Salt  at  K^;  81b  A.  C.  Sugar  at  12  j^^-;  2  Hb  J.  Tea  at  62^/-;  21b 
Soda  at  8^.     O.  B.  and  L. 

Cash  sales  this  day  per  cash  drawer,  $34.21.     C.  B. 

Oct.  3.  Paid  Wm.  G.  Wood,  cash  for  insurance  on  stock  amounting  to  $1500  at 
l%%,  $**.**.  C.  B.  and  L.  Also  paid  cash  for  repairing  shelves,  $8.50.  C.  B. 
Dr.  Expense. 

Bought  of  Robert  Finlay  &  Co.,  City,  a  job  lot  of  Groceries,  Canned  Goods  and 
Provisions,  $314.70.  5%  off.  Terms,  30  days,  or  2}^%  off  for  cash.  Paid  cash  in 
full  for  same,  $***.**.      C.  B.      D.  B.-J.    (Cr.  Cash  Dis.)  and  L. 

Sales  per  order  book:  Mrs.  G.  W.  Hughes,  45  Willow  St.,  61b  Butter  at  35^/-;  % 
bu.  Onions  at  $1.50;  4  Cabbages  at  15^';  31b  Honey  at  35r/.  John  F.  Brooks,  187 
Warren  Ave. ,  }(  bu.  Beans  at  $2 ;  X  bu.  Peas  at  $3 ;  1  qt.  Oysters  at  40^' ;  3  S)  Prunes 
at  10^'.  S.  G.  Olmstead,  187  Madison  Ave.,  31b  O.  G.  Java  Coffee  at  30^;  2  doz. 
Eggs  at  20^';  81b  Maple  Sugar  at  24^/;  2  Chickens,  141b,  at  20(^-.  Mrs.  Geo.  C. 
Lewis,  317  Fulton  St.,  31b  T.  Prunes  at  15^-;  2  gal.  K.  Oil  at  18^-;  101b  Oatmeal  at  -id-; 

1  box  Smyrna  Figs,  50^',     O.  B.  and  L, 

Cash  sales  this  day  per  cash  drawer,  $26.45.     C.  B. 

Oct.  4.  Bought  of  James  C.  Anderson,  1  ton  Prairie  Hay,  $9;  40  bu.  Oats  at 
35^-.  Sold  him  10  lb  Rice  at  10^;  I  sack  P.  Flour,  $3;  101b  Mocha  Coffee  at  25^-  bal- 
ance on  account.      D.  B.-J.,  O.  B.  and  L. 

Paid  cash  for  freight  on  new  goods  received,  $7.95.     C.  B.  and  L. 

I  have  withdrawn  for  private  use,  cash,  $10,  and  appropriated  goods  from  store 
amounting  to  $8.60.     D.  B.-J.,  C.  B.  and  L. 

Oct.  4.     Sent  Franklin  MacVeagh  &  Co.  $350  to  apply  on  account.    C.  B.  and  L. 

Sales  per  order  book:  John  Baldwin,  360  Center  St.,  2  oz.  Indigo  at  15^-;  1  lb 
Borax,  60^';  2  pkg.  S.  G.  Starch  at  20f/;  1  box  Yeast  Powder,  25^-;  4  lb  Cheese  at  18^-. 
Mrs.  W.  N.  Jewett,  185  Ohio  St.,  151b  A.  Coffee  Sugar  at  12^-;  lib  Cream  Tartar, 
60^';  41b  Soda  Crackers  at  10^^;  51b  Picnic  Crackers  at  11^/.  Mrs.  H.  C.  Dement,  164 
Taylor  St.,  2 lb  Chocolate  at  37>^^;  lib  Cocoa,  40^/;  4  doz.  Nutmegs  at  10^;  21b  S. 
Crackers  at  10^-.  L.  B.  Pierce,  243  Hammond  St.,  ^^4^  lb  Cinnamon  at  80(/';  2  qt. 
Oysters  at  373^^-,  101b  S.  Potatoes  at  b(/-;  51b  Y.  H.  Tea  at  40^';  10  lb  A.  Sugar  at  10^'. 
John  F.  Brooks,  187  Warren  Ave.,  51b  J.  Coffee  at  33^;  31b  B.  Tea  at  80^-;  2  gal. 
K.  Oil  at  20r/;   1  Broom,  25^-;  1  doz.  Nutmegs,  25^/.     O.  B.  and  L. 

Oct.  5.  John  F.  Brooks,  187  Warren  Ave.,  has  returned  4H)  J.  Coffee  at  33^'; 
also  paid  cash  on  his  account,  $5.      D.    B.-J.,  C.  B.  and  L. 

Cash  sales  this  day  per  cash  drawer,  $34.89.     C.  B. 

Oct.  6.      Bought  of  farmers  this  day:     Vegetables,  Poultry,   etc.,  amounting  to 

$17.45.      Paid  them  goods  from  store,  $4.20;  balance  in  cash,  $13.25.      C.  B.  and  L. 

Where  produce  or  goods  purchased  are  pa:id  for  in  Merchandise,  make  no  entry,  as  the  goods 
bought  go  to  replace  those  given  in  payment. 

Bought  for  cash,  1  ton  Coal  for  store,  $7.50.     C.  B.  and  L. 

Sales  per  order  book:  Mrs.  James  W.  Haines,  25  Cornell  Ave.,  2  5)  J.  Tea  at 
80^-;  51b  O.  G.  Java  Coffee  at  30^-;  101b  Lard  at  10^;;  1  pk.  Cracked  Corn,  40^';  151b 
Turkey  at  14^-;  1  bu.  E.  R.  Potatoes,  85^/.  Mrs.  H.  W.  Simpson,  180  North  Fifth 
St.,  3  pk.  Apples  at  35^;  121b  Rice  at  UV/;  2  oz.  Indigo  at  12r/;  31b  Chocolate  at  35^-; 

2  gal.  K.  Oil  at  18<^.  Mrs.  G.  W.  Hughes,  45  Willow  St.,  21b  Cream  Tartar  at  45^';  51b 
Oatmeal  at  5(/-;  1  Chicken,  61b,  at  15^;  ^  bu.  S.  Potatoes  at  $3;  2  gal.  N.  O.  Molasses 


124  MODERN  ACCOUNTANT 

at  00(,'.  Mrs.  Henry  W.  Seymour,  44(5  Greenwood  St.,  41b  Butter  at  30^-,  2  Cabbages 
at  20^;  8tt)  Honey  at  45^':  20  tb  Maple  Sugar  at  25^-.      O.  B.  and  L. 

Sent  Franklin  MacVeagh  &  Co.  our  check  for  balance  of  account.  Deduct  the 
cash  discount  on  entire  bill  and  remit  the  balance.  D.  B.-J.  (credit  Cash  Discount 
account),  C.  B.  and  L. 

Credited  David  Haskell  for  Drayage  on  goods,  $1.7.").     D.  B.-J.  and  L. 

Paid  C.  H.  Wilson,  clerk,  cash  for  wages  for  the  week,  $10;  also  David  A.  Brown, 
clerk,  salary  to  date,  $9.     C.  B. 

Cash  received  from  sales  per  cash  drawer,  $42.60.  John  F.  Brooks  has  settled 
his  account  in  full  with  cash,  $*.**.     C.  B.  and  L. 

Rule  and  foot  up  Brooks'  account  at  once. 

Close  the  Cash  Book,  the  balance  of  which  should  be  $1463.67. 

Oct.  8.  Bought  of  Andrew  Bailey,  on  account,  3  Chairs  for  store  at  75^'.  D.  B.-J. 
and  L. 

Received  invoice  of  Groceries  from  Gray,  Kingman  &  Collins,  $193.60;  terms, 
10  days  or  2%  off  for  cash.      Paid  cash  for  same. 

Paid  cash  for  Shoeing  Horse,  $2.50. 

Received  cash  from  S.  G.  Olmstead  on  account,  $10;  from  John  Baldwin,  $6. 

Oct.  9.     Bought  of  Mrs.  Cosgrove,  181b  C.  Butter  at  2o(l:,  $4.50.     Paid  for  same 

in  cash  from  cash  drawer. 

'\ 
Make  no  entry.     The  cash  in  the  cash  drawer  has  not  3-et  been  entered  upon  the  Cash  Bookj 
and  hence  no  entry  is  necessary.     The  merchandise  bought  goes  to  replace  that  which  was  sold,  tor 
which  the  cash  was  received. 

Cash  sales  for  the  day  per  cash  drawer,  $52.80. 

Oct.  10.  Andrew  Bailey  has  repaired  Show  Cases,  for  which  I  credit  him  $3.75. 
Drew  for  private  use,  cash,  $8;  appropriated  goods,  $7.50. 

Sales  per  order  book:  John  F.  Brooks,  187  Warren  Ave.,  3  doz.  Eggs  at  22^-; 
2  qt.  Oysters  at  30</;  1  Lem.  Ext.,  25^/';  101b  B.  Sugar  at  9^';  41b  Raisins  at  15^'-. 
Mrs.  Geo.  C.  Lewis,  317  Fulton  St.,  101b  A.  Sugar  at  12>^^';  51b  Soda  Crackers  at 
9^-;  51b  C.  Fish  at  11^-;  21b  Y.  H.  Tea  at  40«^-.  Mrs.  W.  N.  Jewett,  185  Ohio  St.,  1  bbl. 
Apples,  $3;  2  Brooms  at  25^-;  1  W.  Tub,  $1.20;  1  box  Pepper,  20(1;;  41b  Lard  at  10^-. 
Mrs.  H.  C.  Dement,  164  Taylor  St.,  1  bag  Salt,  10^-;  2  cans  Pears  at  40^;  101b 
Chicken  at  1G</;  2  doz.  Eggs  at  25^-;  3  bars  P.  &  G,  Soap  at  lO^-. 

Cash  sales  per  cash  drawer,  $38.50. 

The  following  amounts  were  paid  on  account  this  day:  Mrs.  James  W.  Haines, 
$8;  Mrs.  G.  W.   Hughes,  $5. 

Oct.  11.     Cash  sales  for  this  day,  $41.30. 

Settled  with  Jevne  &  Co.,  taking  advantage  of  cash  discount. 

Oct.  12.  Bought  invoice  of  oil  from  Standard  Oil  Co.,  $176.40.  Gave  my  note 
for  same  due  in  30  days. 

Oct.  13.  Bought  a  Horse  for  use  of  store,  $110;  also  Harness,  $20.  Paid  for 
same  in  cash.      Paid  clerks  in  full  for  salaries  to  date,  $19. 

Cash  balance,  $340.53. 

Oct.  15.  Bought  of  farmers,  1  bbl.  Sweet  Cider,  Fruit,  Poultry,  etc.,  amounting 
to  $39.80.     Gave  in  payment  goods  amounting  to  $11.75;  cash  for  balance,  $**.**. 

Sales  per  order  book:  L.  B.  Pierce,  243  Hammond  St.,  51b  C.  Fish  at  9^/;  101b 
Mackerel  at  7(1;  31b  Raisins  at  15^^;  2  W.  Pails  at  30y'-.  Andrew  Bailey,  }i  bbl.  Flour, 
75^-;  10 tt)  B.  Sugar  at  12^';  1  Basket,  25^;  1  pk.    Onions,  40^-;  2  bu.  Potatoes  at  80^. 


TRANSACTIONS  125 

Mrs.  H.  W.  Simpson,  180  North  Fifth  St.,  1  pk.  S.  Potatoes,  50^-;  3  doz.  Eggs  at 
20^;  21b  Jap.  Tea  at  Qod--;  8tt)  G.  Sugar  at  11^;;  1  Lem.  Ext,  30^-.  Mrs.  Henry  W. 
Seymour,  446  Greenwood  St.,  2  Brooms  at  30«/-;  3  bu.  Potatoes  at  80^' ;  5%  lb  Chicken 
at  16^;  4  ft)  Crackers  at  10^-;  2  pk.  Apples  at  50^. 

Cash  sales,  $39.60. 

Payments  on  account:  Mrs.  H.  C.  Dement,  $5.05;  Mrs.  George  C.  Lewis,  $3; 
Mrs.  W.  N.  Jewett,  $4.     Mrs.  James  W.  Haines  returns  91b  Lard  at  10^-. 

Oct.  16.     Drew  for  private  use,  cash,  $12,  and  appropriated  $4  in  goods. 

Paid  cash  for  Repairs  in  Cellar,  $3.50;  Varnishing  Counters,  !S;1.75  (Dr.  Ex- 
pense for  both  items);  New  Pair  Scales,  $8.50  (Dr.  Fixtures). 

Cash  sales,  $47.85. 

Oct.  17.  Paid  cash  for  Envelopes,  Bill  Heads  and  Letter  Heads,  $8.50;  Postage 
Stamps,  $2. 

Sales  per  order  book :  James  C.  Anderson,  lOlb  B.  Sugar  at  9^9^;  3  doz.  Eggs 
at  20^-:  2  W.  Tubs  at  80^-;  1  bbl.  Apples,  $2.50.  Mrs.  Geo.  C.  Lewis,  317  Fulton  St., 
2  ft)  Rio  Coffee  at  28«5;  1  bbl.  W.  W.  Flour,  $5.25;  2  bu.  E.  R.  Potatoes  at  80^-;  5  ft) 
Chicken  at  12^/;  3  qt.  Oysters  at  30(/;  2  ft)  Soda  Crackers  at  11^.  Mrs,  H.  C.  Dement, 
164  Taylor  St.,  6ft).  Mackerel  at  8^-;  3  qt.  Oysters  at  32^-;  1  bbl.  Apples,  $2.50;  3ft) 
Raisins  at  15^';  4  bu.  Potatoes  at  60^;  2ft)  Java  Coffee  at  SGd;  1  box  Kirk's  Soap, 
$3.85;  2  cans  Sardines  at  18^.  Mrs.  W.  N.  Jewett,  185  Ohio  St.,  2  Brooms  at  28^';  2 
doz.  Eggs  at  25^;;  10  ft)  G.  Sugar  at  10>^^':  3  gal.  K.  Oil  at  18^;  5  ft)  C.  Fish  at  8^^';  4 
ft)  Soda  Crackers  at  d<f-;  4  bu.  Potatoes  at  75^';  3  ft)  Raisins  at  15^-;  2  ft)  Jap.  Tea  at 
50^';  2  cans  Peas  at  30^';  1ft)  Chocolate,  35^.  Mrs.  G.  W.  Hughes,  45  Willow  St.,  1 
bbl.  Apples,  $3 ;  10  bars  P.  &  G.  Soap  at  8^' ;  2  qt.  Oysters  at  40^ ;  3  doz.  Eggs  at  25^- ; 
2ft)  Butter  at  30^;  3  gal.  S.  D.  Syrup  at  70^-;  1  W.  Pail,  30^;  1  Basket,  25<i^-;  1  box 
Pepper,  20^-. 

Cash  sales  per  cash  drawer,  $45.80. 

Oct.  18.  Bought  of  Thomas  Mason  &  Co.,  on  my  note  at  30  days,  invoice  of 
goods  amounting  to  $218. 

Bought  of  farmer.  Produce,   consisting  of  Butter,  Eggs,  Lard,   etc.,  amounting 

to  $18.60.      Paid  him  goods  amounting  to  $4.50;  cash  from  the  cash  drawer,  $4.10; 

cash  from  the  safe,  $10. 

Cash  in  safe  or  cash  deposited  in  the  bank  differs  from  cash  in  the  cash  drawer,  as  the 
former  has  been  entered  in  our  Cash  Book,  while  the  latter  has  not. 

Oct.  19.     Cash  sales  for  the  day  per  cash  drawer,  $45.60. 

Oct.  20.  Paid  cash  for  Clerk  hire  to  date,  $19.  Withdrew  cash  for  private  use, 
$10;  also  appropriated  goods  amounting  to  $8.40. 

Cash  sales  for  the  day,  as  shown  by  the  cash  drawer,  $46.40,  of  which  I  find  a 
$2  bill  to  be  counterfeit. 

Balance  of  cash,  $472.53. 

Oct.  22.  Order  book:  John  F.  Brooks,  187  Warren  Ave.,  2  pk.  S.  Potatoes  at 
50^-;  2  bagsT.  Salt,  at  25^;  5  R)  T.  Raisins  at  13^/;  1  bbl.  Apples,  $2.50;  1ft)  Jap.  Tea, 
50^-;  1  Lem.  Ext,  30r/;  1  box  P.  &.  G.  Soap,  $3.85.  James  C.  Anderson,  2  qt 
Oysters  at  40?5;  81b  C.  Fish  at  9^';  2  bu.  Potatoes  at  80^-;  6  ft)  Soda  Crackers  at  12^-;  2 
gal.  K.  Oil  at  18^-;  8H)  B.  Sugar  at  9^-.  S.  G.  Olmstead,  187  Madison  Ave.,  10ft)  G. 
Sugar  at  12^-;  5  gal.  K.  Oil  at  18^-;  4  ft)  C.  Fish' at  8^;  6  ft)  S.  Crackers  at  10^-:  3fi)  T. 
Raisins  at  12^/;  2  bu.  Potatoes  at  80^';  1  bbl.  Flour,  $5.50.     Mrs.  James  W.  Haines,  25 


126  MODERN    ACCOUNTANT 

Cornell  Ave.,  81b  Mackerel  at  9^/;  2  W.  Pails  at  25r/-;  81b  Chicken  at  12^- ;  lOlb  G. 
Sugar  at  11^;  2  Brooms  at  20^/^';  3  doz.  Eggs  at  15^-;  31b  Butter  at  25^-.  David  Has- 
kell, 21b  Butter  at  2S{^-;  51b  C.  Sugar  at  8^-;  2  doz.  Eggs  at  18^-;  1  gal.  K.  Oil,  18^-. 

Received  invoice  of  Sugar,  Coffee,  Tea  and  Canned  Goods  from  Franklin  Mac- 
Veagh  &  Co.,  Chicago,  $187.50.  Terms,  30  days,  or  5%  off  10  days.  Paid  freight 
and  drayage  on  same  in  cash,  $11.30. 

Oct.  23.  Received  the  following  payments  on  account:  Mrs.  W.  N,  Jewett, 
$10;  L.  B.  Pierce,  $5;  John  F.  Brooks,  $5.  Mrs.  James  W.  Haines  returns  3  doz. 
Eggs  at  15^',  and  settles  her  account  in  full  by  paying  cash,  $*,**. 

Oct.  24.      Paid  cash  for  advertising  in  the  Evening  Star,  $8.50, 

Paid  cash  to  Carpenter  for  repairing  and  putting  up  additional  shelving,  $4.60; 
Lumber  for  same,  $1.80,     Dr.  Expense, 

Oct.  25.  On  examining  the  goods  received  from  Franklin  MacVeagh  &  Co., 
Chicago,  I  find  a  shortage  of  10  gross  Matches  at  $2.70,  which  I  charge  to  their 
account. 

Oct.  26.     Paid  cash  for  new  Harness,  $27.50. 

Cash  sales  per  cash  drawer,  $32.80. 

Oct.  27.  Order  book:  John  Baldwin,  360  Center  St.,  3  doz.  Eggs  at  18^';  3  qt. 
Oysters  at  30^;  8  lb.  P.  Crackers  at  10^-;  2  pk.  S.  Potatoes  at  60^';  2  Brooms  at  20^';  3 
bu.  Potatoes  at  80^';  81b  Turkey  at  15c;  2  gal.  Cider  at  40^';  31b  J.  Coffee  at  30^'. 
Mrs.  Henry  W.  Seymour,  446  Greenwood  St.,  10 lb  B,  Sugar  at  9r/-;  5  bu.  Potatoes  at 
80r/-;  61b  Raisins  at  13^/;  21b  Y.  H.  Tea  at  39r/;  10  tbs.  A.  C,  Sugar  at  9>^<-;  2  gal. 
N.O.  Molasses  at  60^/-;  2  F.  Dusters  at  $1.30;  1  Mouse  Trap,  50^-.  L.  B.  Pierce,  243 
Hammond  St.,  3  doz.  Eggs  at  20^/-;  101b  Gran,  Sugar  at  10^4 ^^  51b  S,  Crackers  at  9^-; 
21b  Java  Coffee  at  35^-;  2  gal,  N,  O,  Molasses  at  60^-  y^  bbl.  Apples  at  $3.60;  2  boxes 
Washing  Crystal  at  15^';  3  L.  Wicks  at  2^-;  2  bottles  Bluing  at  5^/.  Mrs.  H.  W. 
Simpson,  180  North  Fifth  St.,  101b  B.  Sugar  at  9^-;  5  bu.  Potatoes  at  80^-;  81b  Butter 
at  25f/;  81b  A,  C.  Sugar  at  ^y^d-,  21b  Jap.  Tea  at  40^-;  81b  Turkey  at  18^;  2  gal.  K. 
Oil  at  18^-;  31b  Mackerel  at  8^/;  2  Brooms  at  25^^. 

Cash  sales  per  cash  drawer,  $29.60. 

Drew  cash  for  private  use,  $12,  and  appropriated  goods  from  stock,  $8.60. 

Paid  Clerks  for  services  to  date  in  full,  $19. 

Payments  on  account  have  been  made  by  Mr.  H.  W,  Simpson,  $5 ;  Mrs.  Geo.  C. 
Lewis,  $5. 

Cash  balance  per  Cash  Book,  $486.85 

Oct,  29.  Order  book:  John  Baldwin,  360  Center  St,,  21b  Mixed  Nuts  at  20^-;  1 
box  C.  Figs,  25f/;  2  doz.  Lemons  at  25^';  2  cans  Peaches  at  30^-;  81b  Raisins  at  10^-;  3 
doz.  Eggs  at  18^-;  2  boxes  Sardines  at  18^\  David  Haskell,  1  bu.  Turnips,  85^;  2 
Cabbages  at  25^/;  lib  J.  Coffee,  25^/;  1  can  C.  Milk,  75r/;  51b  D.  Peaches  at  40^'. 
Mrs.  H.  C.  Dement,  164  Taylor  St.,  31b  C.  Fish  at  10^-;  1  Lem.  Ext.,  25^/;  101b  B.  W, 
Flour  at  5^/;  51b  D.  Beef  at  20^/-;  1  W,  Pail,  25^-;  2  F,  Dusters  at  $1.25.  Mrs.  Henry 
W,  Seymour,  446  Greenwood  St.,  81b  Chicken  at  10^/;  51b  B.  Sugar  at  9^;  1  cake 
Chocolate,  lib,  25^/;  2  qt.  Oysters  at  30^';  51b  S,  Crackers  at  8r/;  1  Broom,  30^;  lib 
Jap.  Tea,  50^;  1  bbl.  W.  W.  Flour,  $6. 

Cash  sales  per  cash  drawer,  $49. 10, 

Oct.  30.      Paid  Franklin  MacVeagh  &  Co.,  Chicago,  cash  for  balance  of  invoice, 


SINGLE   ENTRY  127 

less  5%  discount.     Balance  of  invoice,  $***.**;  cash  discount,  5%,  $*.*3.      Paid  them 

Cash  sales  per  cash  drawer,  $38  CO. 

Paid  cash  for  Postagfc  Stamps,  $2.50. 

Oct.  31.  Bought  for  cash  a  Coal  Hod  and  Shovel  for  use  of  store,  $1.30;  a 
Whip,  40^,  and  paid  for  Shoeing  Horses,  $2.50. 

Order  book:  Mrs.  Henry  W.  Seymour,  446  Greenwood  St.,  1  bbl.  W.  W,  Flour, 
$5.25;  2  bbl.  Apples  at  $2.75;  1  bu.  Turnips,  $1.25;  1  box  Kirk's  Soap,  $4.10;  2  can 
Tomatoes  at  15^;  1  bu.  Onions,  75^.  L.  B.  Pierce,  243  Hammond  St.,  61b  Chicken 
at  10^;  5ib  G.  Sugar  at  10 >^^;  1  Lem.  Extract,  25^';  2  doz.  Oranges  at  25(25;  1  box  C. 
Figs,  25^'.  Mrs.  Geo.  C.  Lewis,  317  Fulton  St.,  2  pk.  S.  Potatoes  at  50^';  2  qt. 
Oysters  at  30^/;  10 lb  Rice  at  5^';  21b  Java  Coffee  at  20^-;  8ib  S.  Crackers  at  9^';  6Bb 
Mackerel  at  ^Izf- 

Payments  on  account:  Mrs.  Henry  W.  Seymour,  $20;  L.  B.  Pierce,  $5;  David 
Haskell,  $4.10. 

Take  trial  balance,  showing  differences  only;  that  is,  an  account  shows  a  debit 
balance  or  a  credit  balance,  but  not  both.      Compare  with  following 

RESULTS 

Cash  on  hand  per  Cash  Book $444.48 

Personal  Accounts  owing  me 127.56 

Personal  Accounts  I  owe 107.73 

Bills  Payable  outstanding - 394.40 

Make  out  a  statement  and  close  the  Ledger. 

INVENTORIES 

Merchandise $2344.35 

Store  Fixtures 375.00 

Horse  and  Wagon 360.00 

One-half  Month's  Rent  owing 41.66 

After  closing 
(Student's)  Net  Capital 3107.60 

SINGLE    ENTRY 

On  account  of  its  simplicity,  Single  Entry  bookkeeping  is  commonly  used  by  small 
tradesmen  and  retailers.  Its  object  is  to  keep  accounts  with  persons  with  whom  we 
have  dealings  in  such  a  manner  as  to  readily  show  what  they  owe  us,  or  we  owe 
them,  and  hence  only  personal  accounts  are  opened  in  the  Ledger.  The  distinguish- 
ing feature  between  Single  and  Double  Entry  consists  in  the  fact  that  in  the  former 
each  transaction  does  not  always  produce  both  a  debit  and  a  credit  of  equal  amount 
in  the  Ledger,  while  in  the  latter  it  does.  Hence  in  single  entry  we  can  not  make 
use  of  that  valuable  test,  the  Trial  Balance,  nor  can  we  obtain  from  our  books  sufifi- 
cient  facts  to  make  up  that  important  statement,  the  Balance  Sheet. 

In  order  to  fully  appreciate  the  advantages  and  disadvantages  of  the  two  sys- 
tems of   bookkeeping,    Single  and  Double  Entry,   it  is  proposed  that  the  Retail  set 
just  completed  be  now  written  up  according  to  the  methods  used  in  single  entry. 
Books  to  be  used:  Day  Book,  Cash  Book,  Order  Book  and  Ledger 

ORDER  BOOK 

The  same  form  as  used  in  double  entry — in  fact,  the  same  book  already  written 
up — may  be  used.  The  folio  checking  pages  may  be  written  just  above  the  folio 
checking  of  the  first  set. 


128 


MODERN    ACCOUNTANT 


DAY    BOOK 

The  single  entry  Day  Book  differs  in  no  important  respect  from  that  used  in 
double  entry,  the  chief  distinction  being  in  the  use  of  Dr.  and  Cr. ,  to  indicate 
whether  a  person  is  to  be  charged  or  credited.  All  transactions  in  which  personal 
accounts  are  not  involved  may,  or  may  not,  be  entered  in  this  book,  according  to 
discretion.  In  the  following  set  such  transactions  are  not  entered  in  the  Day  Book. 
Entries  in  this  book  are  posted  directly  to  the  Ledger.      See  form. 

CASH  BOOK 

is  the  same  as  used  in  double  entry,  but  is  kept  only  as  an  auxiliary  book,  and  is  not 
posted  from,  its  object  being  to  keep  convenient  account  of  the  cash  received  and 
paid  out,  and  the  balance  on  hand. 

DAY  BOOK 


19- 
Oct. 


(Student) 

Cash  invested  in  busjness 

Franklin  MacVeagh,  Chicago 
Mdse.,  terms  3  $  10  da.,  net  20  da. 

James  C.  Anderson 
1  ton  Prairie  Hay 
40  bu.  Oats 


LEDGER 
( Student 


Cr. 

Cr. 

Cr. 
35c 


9 
14 


.3000 
750 

23 


Dr. 


Cr. 


19— 
Oct. 


Cash  investment 


3000 


Franklin  MacVeagh 


Dr. 


Chicago,  111. 
Cr. 


19— 
Oct. 


19— 
Oct. 


Mdse.,  terms  3;/  10  da.,  net  20  da. 


John  F.  Brooks 


750 


187  Warren  Ave. 
Dr.  Cr. 


1  bbl.  W.  W.  Flour  "     10  11.  C.  Meal  .03 

:!ii 

4  gal.  Molasses  .75  '■'■ 

9 

30 

]i  bu.   Beans    2.    •"■"    X    bu.    Peas  3.  •"■"' 

1    (It. 

Oysters  -*"    3  lb  Prunes  10   ='" 

1 

95 

5  0..  Coffee  .33  ^  •«•'■•  3  It.  B.  Tea.SO^'o 

2   gal. 

K.  Oil  .20  •'"»  1  Broom  •-•■'  Nutmegs   -^ 

4 

95 

4  tb  Coffee  returned  .33 

1 

32 

Cash 

5 

Cash 

9 

88 

16 

20 

16 

20 

LEDGER   HEADINGS  129 

LEDGER  HEADINGS 

In  single  entry,  accounts  in  the  Ledger  will  be  opened  only  with  personal 
accounts.  Other  accounts  are  at  times  kept,  but  it  is  an  exception  to  do  so.  You 
will  find  the  personal  accounts  named  on  page  122. 

Write  up  the  transactions  for  October,  using  the  books  already  described.  All 
debits  and  credits  of  personal  accounts,  with  the  exception  of  the  orders,  must  be 
entered  in  the  Day  Book  and  posted  to  the  Ledger.  All  entries  in  the  Order  Book 
are  carried  to  the  debit  side  of  personal  accounts  in  the  Ledger  and  do  not  appear  in  the 
Day  Book,  When  the  records  are  complete,  close  the  Ledger  and  make  out  a  state- 
ment of  resources  and  liabilities.  The  present  worth  of  the  proprietor  must  agree 
with  the  net  capital  at  closing,  as  previously  shown  by  double  entry. 

HOW  GAINS  OR  LOSSES  ARE  PRODUCED 
There  are  two  methods  of  creating  gains  and  two  methods  of  creating  losses  in  a 
business.  At  the  commencement  of  a  period  for  which  the  gains  or  losses  are  to  be 
determined  there  are  certain  resources  and  certain  liabilities.  The  exchanging  of 
one  commodity  for  another  is  a  shifting  from  one  kind  of  resource  to  another.  Thus, 
we  may  buy  merchandise  for  which  we  give  currency.  The  resource,  merchandise, 
has  been  increased  and  cash  resource  has  been  reduced.  We  may  now  be  able  to 
dispose  of  this  merchandise  for  more  than  it  cost  us  and  to  receive  therefor  cash. 
By  this  exchange  our  resources  have  been  increased,  while  our  liabilities  have 
remained  the  same.  Again,  our  books  may  show  that  we  owe  Brown  $100  on  a  note 
due  in  one  year  without  interest.  He  accepts  $90  cash  for  the  note.  Our  lia- 
bilities have  decreased  $100  while  our  resources  have  decreased  only  $90.  The 
result  is  a  gain  of  the  difference,  $10. 

Gains  therefore  are  produced  by  increasing  the  resources  or  by  decreasing  the 
liabilities. 

Losses  are  produced  by  increasing  the  liabilities  or  by  decreasing  the  resources. 

TWO  METHODS  OF  ASCERTAINING   GAINS  OR  LOSSES 

There  are  also  two  methods  of  determining  the  gains  or  losses  in  a  business  for 
a  given  period.  One  is  after  eliminating  any  withdrawals  of  capital  to  compare  the 
net  capital  at  the  commencement  of  the  period  with  the  net  capital  at  the  end  of  the 
period.  This  is  the  method  that  must  be  used  when  the  books  are  kept  by  single 
entry. 

The  other  method  is  to  find  the  difference  between  the  cost  and  product  sides  of 
each  account  that  produces  a  gain  or  a  loss  and  when  these  are  assembled  to 
determine  the  total  gain  or  loss.  This  is  the  method  you  have  use.d  in  the  preceding 
set.  You  should  understand  both  methods,  which  should  always  give  the  same 
results. 

Find  in  both  ways  from  the  following  statements  whether  Arthur  Lyons,  merchant,  is  prospering 
or  not.  At  the  beginning  of  the  year  his  statement  stood:  Mdse.  on  hand  $2467.50,  Cash  on  hand 
$495.75,  Notes  Receivable  $634,  Personal  accounts  due  him  $1567.10,  Notes  Payable  $1100,  Personal 
accounts  he  owed  $157.50.  At  the  end  of  the  year  his  stock  of  merchandise  inventoried  $2674.30  and 
his  Ledger  showed  the  following:  Cash  on  hand,  $912.75,  Mdse,  Dr.  $7684,  Mdse,  Cr.  $11756.15, 
Expense  $3188.60,  Interest  Dr.  $115.60,  Interest  Cr,  $4.25,  Notes  Receivable  $846.30,  Notes  Payable 
$165,  Personal  accounts  due  him  $563.25,  Personal  accounts  owing  $262.75,  withdrawn  for  private 
use  $316.     Make  a  statement  for  each  method. 


130  MODERN  ACCOUNTANT 

TO  CHANGE  FROM  SINGLE  TO  DOUBLE  ENTRY 

As  has  been  previously  stated,  property  accounts  do  not  usually  appear  on  a 
Single  Entry  Ledger.  Aside  from  accounts  with  persons  the  various  resources  and 
liabilities  and  the  amount  of  each  must  be  ascertained  by  taking  an  inventory.  A 
statement  should  first  be  made  showing  the  resources  and  then  the  liabilities.  The 
difference  between  these  is  the  net  capital  or  the  net  insolvency.  Accounts  must 
now  be  opened  in  the  Ledger  with  each  resource  and  each  liability  not  already  on  the 
Ledger,  debiting  the  resource  and  crediting  the  liability  in  each  case  for  the  amount 
shown  by  the  statement.  The  personal  accounts  being  already  on  the  Ledger  will 
not  of  course  be  re-entered.  If  the  proprietor's  account  is  already  on  the  Ledger  it 
will  now  be  only  necessary  to  credit  it  with  any  gain  or  debit  it  for  any  loss.  If  this 
account  is  not  already  on  the  Ledger  it  must  be  opened  and  credited  with  the  net 
capital  at  the  time  of  making  the  change.  A  trial  balance  should  now  be  taken  to 
prove  the  equilibrium  of  the  Ledger. 


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